Mexico awards ‘integrated’ oil contracts

Mexico’s state-owned oil company on Aug. 18 awarded its first production-and-exploration contracts for depleted oil fields to a Mexican firm and a British-based company, taking another step in allowing more private involvement in the tightly controlled sector.

Petroleos Mexicanos awarded two multi-services exploration and production contracts in the Gulf coast state of Tabasco to London-based Petrofac Facilities Management Ltd. Another Tabasco field was contracted to a Mexican company, Administradora en Proyectos de Campos, Pemex director Juan Jose Suarez Coppel said. Under such integrated contracts, companies take responsibility for a broad range of services and are paid at least in part based on performance. These types of contracts were approved by Mexico’s Congress in October 2008 after a heated debate and protests by Mexicans worried about ceding control over an important symbol of national sovereignty.

Mexico’s oil company has used private contractors for decades, but financial arrangements have largely been restricted to fixed payments for specific services.

Pemex argued it needs private investment to tap underperforming oil fields. The company said the fields in Tabasco currently produce about 13,000 barrels a day but could yield as much as 55,000 with new technology expected to be brought in by the private firms.

The fields involved in the new contracts are in three areas that produced lots of oil in the 1960s but have been largely ignored since. They have probable reserves of about 200 million barrels of crude equivalent, Pemex says.

Nearly 30 Mexican and foreign companies inquired about the contracts. Pemex said it will invite the companies to bid for similar contracts in the northern part of the state and for deepwater exploration.

Mexico’s oil production has fallen about 16 percent since 2007, from about 3.1 million barrels a day to 2.6 million barrels last year.

Oil is the country’s biggest source of foreign income and finances about 40 percent of the government’s annual budget.

—The Associated Press