A recent billion-dollar discovery of crude oil in Mexico might be the turnaround moment that Mexico needed in order to lure major big pins in the oil industry to invest. This comes at a time when drillers were cutting exploration funds due to little output but sing then drillers from Europe and Italy have increasingly drawn interest and become involved. Auctions in the past drew spotty interest but the discovery could potential driver higher bids and added interest in the future as the Mexican Government seeks to boost production levels which have fallen by a third over the past decade.
Recently three big shots; Talos Energy LLC, Premier Oil Plc and Sierra Oil & Gas announced a discovery done by foreign explorers after a span of 80 years. The three companies discovered an estimated 1.4 billion to 2 billion barrels of crude oil in a reservoir. Pablo Medina, an analyst from Wood Mackenzie Ltd cited that future bids were likely to be more aggressive as the discovery would rev up interest in Mexico’s energy industry.
In a statement by Sierra, the company said that the Mexican Government would receive 68.99 percent profit per barrel and up to 80 percent when considering taxes and fees for the whole project. President Enrique Pena ventures into reforming the energy sector in 2013 but the fruits were seen after Talos Energy’s oil prices dropped. This reforms involved amending the constitution in order to allow foreign oil investors into the country. Something that hadn’t been done its nationalization in 1938.
After the amendments, the first auctions were received in 2015 where Eni was the first major industry players to win several contracts. Since then world oil corporation such as Chevron Corp., BP Plc, and Exxon Mobile Corp won contracts. Since then Mexico has enabled bidding of shallow waters by explorers other the state-owned Pemex.
The field holding the discovery is located sixty kilometers offshore from the Mexican Port of Dos Bocas. This discovery comes after three companies jointly won an exploration license two years ago. This discovery has also de-risked a bit the shallow water opportunities as there is a potential to find assets overlooked by Pemex cited Jeremy Martin.
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