BHP Billiton on Dec. 5 won a historic bid to partner with Mexican state oil company Pemex in a joint venture to develop a potentially lucrative deep water field in the country's untapped Gulf waters.
The local unit of BHP Billiton secured the rights to tie-up with Pemex on its Trion light oil field, less than 80 km (50 miles) from the U.S.-Mexico maritime border.
Australia-based BHP outbid Britain's BP, the only other company that participated, with a $624 million offer to complement its 4% additional royalty bid, said Mexico's oil regulator, the national hydrocarbons commission (CNH).
Pemex estimates Trion will require an $11 billion investment to successfully develop. The competition marks the first time the ailing Mexican oil giant will join forces with a private company to drill since losing its monopoly in 2013.
"This is a transcendental step that turns Pemex into a 21st century company," Energy Minister Pedro Joaquin Coldwell said.
Pemex chief executive Jose Antonio Anaya said the Trion field would produce 120,000 barrels per day by 2025.
The awarding of the Trion tie-up coincides with a series of deep water blocks being put out to tender Dec. 5.
A successful auction would be welcome news for Latin America's no. 2 economy, which has been roiled by fears of economic turmoil by Donald Trump's election as U.S. president.
The peso currency has slumped amid fears Trump will make good on threats to tear up a joint trade deal with Mexico or impose hefty tariffs on Mexican-made goods.
With ten blocks up for grabs, the deep water auctions have drawn the attention of the world's biggest oil companies.
Trion is nearly 1,285 sq km (500 sq miles) in size and is sandwiched between five other blocks in the border-straddling Perdido Fold Belt, an oil-rich geological formation that has been successfully tapped in U.S. Gulf waters for years.
Initial investments in the project are expected to begin next year, while commercial production is not seen coming online until 2022 at the earliest.
Recommended Reading
US NatGas Flows to Freeport LNG Export Plant Drop Near Zero
2024-04-11 - The startup and shutdown of Freeport has in the past had a major impact on U.S. and European gas prices.
US Natgas Prices Hit 5-week High on Rising Feedgas to Freeport LNG, Output Drop
2024-04-10 - U.S. natural gas futures climbed to a five-week high on April 10 on an increase in feedgas to the Freeport LNG export plant and a drop in output as pipeline maintenance trapped gas in Texas.
Exclusive: Chevron Balancing Low Carbon Intensity, Global Oil, Gas Needs
2024-03-28 - Colin Parfitt, president of midstream at Chevron, discusses how the company continues to grow its traditional oil and gas business while focusing on growing its new energies production, in this Hart Energy Exclusive interview.
Imperial Expects TMX to Tighten Differentials, Raise Heavy Crude Prices
2024-02-06 - Imperial Oil expects the completion of the Trans Mountain Pipeline expansion to tighten WCS and WTI light and heavy oil differentials and boost its access to more lucrative markets in 2024.
Carlson: $17B Chesapeake, Southwestern Merger Leaves Midstream Hanging
2024-02-09 - East Daley Analytics expects the $17 billion Chesapeake and Southwestern merger to shift the risk and reward outlook for several midstream services providers.