From Houston (BN): Officials, analysts, everyone involved has said that award of just two of 14 blocks offered in Mexico’s first-round auction is a disappointment, but most also see the outcome as a step forward and a learning opportunity for the government and industry.

Indeed, Mexico spread auctions over several months to give government and industry time to learn how best to proceed.

Dallas Parker of the Mayer Brown law firm in Houston has followed Mexican energy reform, attended the auction and sees room for improvement in the bidding process as well as financial and contract terms.

‘Mexico will have to think whether it is the best strategy to keep the minimum (bid) confidential throughout the bidding process,’ Parker said. ‘It is not a universal practice in global bid rounds. Some blocks received bids that did not meet the government’s minimum take, but bidders were bidding real risk money in the blind.’

There’s also concern among industry players about Mexico’s provisions on administrative rescission of awards, ‘seen as overly aggressive by quite a number of potential bidders,’ Parker said.

‘Interest remains high in the deepwater blocks, and it will be very interesting to see what effect the results of this disappointing first phase has on the contract and fiscal terms in coming bids, including deepwater. Projects in Mexico must compete economically and in risk profile with projects all over the world,’ Parker said.

It is unclear exactly when Mexico will identify deep water blocks to be offered and no date has been set for their auction. ‘We hear rumours that Mexico will publish deep water terms in the late summer or early fall, but so far, these are just rumours, nothing official,’ Parker said.

Offshore