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Chinese oil companies bid for Mexican gas block
The Associated Press
A consortium led by the China National Petroleum Corp. was among two groups that bid Nov. 18 to develop a block of natural gas reserves in the Burgos basin of northeastern Mexico.
The bids were submitted for the multiple service contract to produce gas at Fronterizo, the sixth of seven blocks that Mexican state oil monopoly Petroleos Mexicanos, or Pemex, is tendering.
One consortium, Houston-based Amistad Energy Corp., includes China’s Daquing Oilfield Limited-Downhole Service Sub-Company, a unit of the China National Petroleum Corporation, and Tiainjin Dagang Shengkang Petroleum Technology Development Co. Ltd.
A second bid was received from the consortium that won an earlier contract, which includes Brazil’s Petroleo Brasileiro SA, or Petrobras, Japan’s Teikoku Oil Co. and Mexico’s D&S Petroleum, a unit of Grupo Diavaz.
Pemex said in a statement that it expects to award the Fronterizo block Nov. 19, after the economic proposals are opened.
Under the 20-year multiple service contracts, Pemex hopes to raise production at Burgos to 2 billion cubic feet a day from the current 1 billion cubic feet per day, with investment between US$8 billion and US$10 billion.
Tenders for the fourth and fifth blocks, Corindon-Pandura and Ricos, worth a combined US$5.6 billion, received no bids, however.
Speaking Nov. 18 at an event hosted by the American Chamber, Pemex director Raul Munoz Leos said they will probably be split into smaller blocks with the intention of appealing to medium-size companies.
Spain’s Repsol-YPF SA won the first block with a US$2.44 billion bid, but other large companies, namely Exxon Mobil Corp. and France’s Total SA, didn’t bid after buying several data packages.
Munoz said oil majors attributed their lack of interest to several factors, including potential investments in other regions of the world such as Russia, Saudi Arabia and Venezuela.
“In China and Cuba, for example, the degree of opening and reduction of state control in the sector is notable,” Munoz said. “Thanks to private investment, China has overtaken Mexico in proven reserves of natural gas and crude oil.” Oil and gas concessions banned Mexico’s Constitution has banned oil and gas concessions since the expropriation of the oil industry in 1938, although there have been growing calls in recent years to allow gas concessions to help meet demand and counter a recent surge in imports.
Houston-based oil consultant George Baker, of Mexico Energy Intelligence, pointed to several possible reasons for the majors not bidding, ranging from “unattractive economics” to “unattractive politics.”
They could also have been interested in attaining greater access to Pemex, and building a relationship with the company, Baker said in report.
A number of opposition legislators point to the 20-year life of the contracts, and charge that they violate the constitution. Pemex argues that they are the quickest and cheapest way to get the gas out of the ground, since they bundle many services into a single contract.
The bidding date for the seventh block in the current round of tenders, called Olmos, was moved to mid-January at the request of a potential bidder.
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