Bids opened for natural gas basin

Gary Park, Petroleum News Calgary correspondent

Stated-owned Pemex has opened bids for the development of four blocks in the Burgos Basin in an attempt to attract private capital and solve its sagging natural gas production.

It hopes to award multi-service contracts of up to 20 years, starting with an initial investment of $1 billion, growing to as much as $7 billion by 2006, when Burgos production is targeted at 2 billion cubic feet per day, double current output.

The challenge facing Pemex, as it embarks on its most ambitious push yet to attract private capital, is to build its gas volumes to 7 billion cubic feet per day from a long-standing plateau of 4.4 billion cubic feet per day. However, opposition parties are threatening a legal challenge to upstream contracts they insist are in breach of the Mexican constitution, which does not allow contractors to book reserves and requires all gas produced to remain Pemex property.

The first winning bids are scheduled to be announced Sept. 18 and work on all four blocks is intended to start this year. Interested parties can pay up to $120,000 per block for data packages.