Mexico’s Energy Minister recently announced plans for the highly anticipated tender of deepwater exploration blocks in the Gulf of Mexico. The fourth oil auction, which comes following two shallow-water and one onshore rounds, is expected to take place towards the end of this year and include 10 blocks.
An estimated three quarters of Mexico’s prospective oil and gas resources are in deep waters or unconventional fields and while the sharp decline in international oil prices may deter spending on some projects, the overall framework is still broadly favourable towards those looking at the region.
Whilst the outcome will depend on a wide range of factors including the contractual regime, the cost and risk of blocks available and the industry environment, the number and type of bidders is expected to expand again in the fourth lot.
What’s missing is the investment and technical expertise. We believe there is a huge amount of potential for innovative and experienced organisations whose technical skills and knowledge can help small to medium companies successfully navigate the challenging industry landscape and give them a competitive advantage in the bidding process.
As the only firm involved in assisting a client securing successful awards in the first licensing round, we have seen a lot of interest from companies interested in investing in Mexico. Investors are looking for support in generating development concepts, rationalising complex investment scenarios and understanding how to deliver commercial benefits through working as an integrated team. Clients are keen to utilise ADIL’s experience, gained through delivering commercially challenging projects globally, and apply that to field developments in Mexico.
From an industry perspective, much has been learned from the earlier tenders with regards to the operational requirements. Companies are becoming increasingly aware of the cultural and legacy issues which they too must be prepared to navigate.
Mexico may not be an easy market; it has not seen the immediate influx of foreign investment in the same way as other developing regions have with questions over the robustness of the local supply chain and infrastructure capability amongst others. With the country open for investment however, it is our view that these potential issues can, and will, be turned into business opportunities.