Mexico will alter terms of oil blocks being auctioned this year in response to criticism from prospective bidders that crude’s rout made original requirements onerous, Bloomberg said March 2.

Authorities will release new fiscal terms for shallow water contracts on Feb. 27, Finance Minister Luis Videgaray said at an energy summit in London March 2. He spoke after BP Plc (NYSE: BP) CEO Bob Dudley said terms “need to be a little more competitive,” echoing comments by Occidental Petroleum Corp. (NYSE: OXY) and Mexico’s Alfa SAB.

“The basic change on the fiscal side is to ensure that adjustment mechanism provides more upside to investors, which was perhaps the most important criticism that we heard in the first round from many sources,” Videgaray said. “We want to make sure contracts are competitive.”

Before oil slumped to the lowest levels since 2008, Mexico laid out production-sharing contracts that included a 60% cost recovery limit and call for 25% local content in the first year. Occidental CEO Stephen Chazen said Jan. 29 he’d rather develop U.S. projects than “fool around with some ridiculous contract” in Mexico.

“Under these terms it doesn’t make a lot of sense to invest in Mexico as opposed to investing somewhere else,” Duncan Wood, director of the Mexico Institute at the Woodrow Wilson International Center for Scholars, said by phone from Washington.

Offshore Resilience

BP has a record 10 rigs active in the Gulf of Mexico as U.S. offshore investments prove resilient to global cutbacks. The company still sees a “great future” for Mexico as the country opens up its energy industry to private competition for the first time since 1938.

Rigs working in the Gulf will rise by more than 30% this year compared with 2014, according to data from Wood Mackenzie, an industry consultant. At the same time, the number of land-based rigs in the U.S. has fallen by a third since October, bearing the brunt of industry-wide cutbacks that have shed tens of thousands of jobs. The rise in deep-water drilling stems from years of planning and billions of invested dollars.

Mexico passed legislation in 2013 to end state-owned Petroleos Mexicanos’ (Pemex) production monopoly and allow foreign companies to develop fields. The energy opening is forecast by the government to generate $50 billion in investments by 2018.

International Interest

Preliminary contract details for Mexico’s first-ever private block auction were announced in December and won’t be finalized until May 29, National Hydrocarbons Commissioner Juan Carlos Zepeda said March 2 in Mexico City. Auction winners will be unveiled in mid-July, he said. Mexico’s National Hydrocarbons Commission, known as CNH, has requested feedback and commentary regarding the fiscal terms.

Chevron Corp. (NYSE: CVX) and ExxonMobil Corp. (NYSE: XOM) are among 25 companies that have purchased access to geological and seismic data for the shallow water blocks.

Mexico continues to see interest from international companies even after oil’s plunge, Deputy Minister Lourdes Melgar told reporters in Mexico City. Mexico last week announced five shallow-water areas to be auctioned this year.

Oil companies around the world have lowered investment plans and are cutting staff amid falling profit margins, including Pemex, which trimmed $4 billion from its annual budget and will announce layoffs in the coming weeks, CFO Mario Beauregard told Radio Formula.

Mexico’s proposed tax structure may be pricing the country out of the market as would-be investors take a more cautious approach, Gabriel Salinas, an energy lawyer at Mayer Brown, said by telephone from Houston.

“The small shallow water areas can have high exploratory costs so the risk for the companies is high as well,” he said.