Repsol gets Pemex contract; blocks could total $10 billion

The Associated Press

Spanish-Argentine energy concern Repsol YPF SA won a multiple service contract Oct. 16 to produce natural gas for Mexican state oil monopoly Petroleos Mexicanos, or Pemex, with a bid of US$2.44 billion.

Repsol was the only company to present a bid for the first of seven blocks that Pemex is tendering for gas production in the Burgos basin of northeastern Mexico.

Pemex said the bid price “includes the value of the goods and services to be provided over the 20-year life of the contract” and that it met the state company's set of reference prices.

The Reynosa-Monterrey block is the largest of the seven being tendered in the first round of multiple service contracts.

Bids for the remaining six blocks, which include large, medium and small blocks, are expected to be submitted by late November.

French concern Total SA and Exxon Mobil Corp. had acquired data packages, but eventually didn't bid for Reynosa-Monterrey.

Through the multiple service contracts, Pemex hopes to add 1 billion cubic feet a day of natural gas to its production, which it aims to raise to 6.9 billion daily cubic feet in 2006 from 4.5 billion cubic feet per day at present.

Pemex said that investment in the seven blocks could amount to as much as US$10 billion.

Burgos lies across the U.S. border from Texas’ most-productive gas fields. It is Mexico’s main non-associated gas-producing region, with current output about 1 billion cubic feet per day.

Repsol-YPF set up an office in Mexico in February to compete for the contracts. The company is already present in Mexico's natural gas market with its 24 percent stake in Gas Natural SDG SA, which operates several natural gas distribution networks across the country.

Pemex has about a 5 percent stake in Repsol YPF.