Australia’s BHP Billiton is the latest company to start making inroads into Mexico’s emerging deepwater potential in the Gulf of Mexico by signing up with Pemex to exchange expertise.
Under a newly signed Memorandum of Understanding the two companies will exchange technical knowledge, information, experience and practises.
BHP, already a significant player of course on the US side of the border, plans to leverage that expertise in the new relationship with Mexico’s state oil company as the country’s offshore acreage begins to be opened up to international competition through the sweeping energy reforms pushed through by the country’s government.
“We have proven we can build projects better and faster than most operators, and our offshore facilities have some of the highest operational uptimes and safety records anywhere in the world,” said BHP’s president Tim Cutt. “We see considerable opportunity in Mexico following the recent economic reforms, and we are excited about the deepwater and the extension of the Paleogene play into the Perdido play. We look forward to sharing our technical knowledge and experience with our Mexican partners.”
Citing BHP’s Shenzi development in the US Gulf, Cutt said it was one of the best examples of a deepwater development, measured by several margins: “Shenzi continues to be one of the great success stories in the deepwater Gulf of Mexico – whether it’s time from discovery to first production, drilling costs, safety, uptime of approximately 95% or sustaining production levels.”
He added in a teleconference call afterwards: “We obviously wouldn’t be here if we didn’t think the relationship would extend beyond the exchange of technical data. Once we get the data, once we understand the fiscal regime, we’ll be able to actually move quite quickly... We see this as a long-term opportunity for us and we want to give it a real good shot.”
The first bidding round for oil and gas exploration licences is due next year. The first chance looks set to emerge in February with a planned offer of leases over discovered mature resources.
BHP, however, is understood to be targeting in particular the prolific Perdido play in the north-west deepwater Gulf, which has yielded large discoveries on the US side of the border.
DI understands Mexico’s Energy Ministry plans to auction 169 blocks – 109 for exploration and 60 for production – in the first competitive bidding round. Of the blocks auctioned, 28 will be in deepwater, including up to 11 in the Perdido area near the US-Mexico maritime border. The deepwater resources amount to a prospective 4.8 Bboe, according to the ministry.
However the fiscal terms for the leases have not yet been unveiled, and Cutt said the final details would be critical. “All of industry is in the same situation where we are waiting to see the final terms [and] how that will work,” he said. “I think everybody has been open and honest about the fact that the terms will need to be competitive for industry to bring large capital dollars to bear.”
BHP’s initial linkup with Pemex came as Mexico hosted a National Oil Companies Congress in Cancun, where Pemex chief executive Emilio Lozoya outlined the energy transformation now underway.
Lozoya underlined that the reforms give Pemex the right to seek collaboration with other public, private or national companies, “...through alliances and partnerships with other companies,” adding: “We can empower Pemex investment, attracting capital and spreading the risk of the projects”.
Lozoya went on to predict that the estimated total investment at the national level among all participants in the sector could eventually reach close to US $80 billion per year.
Mexico’s Energy Secretary, Pedro Joaquin Coldwell, said the reforms, which he described as “the most significant change made in Mexico in eight decades,” will attract capital and technology “....while ending the decline in oil production”.
During the congress, a total of 154 oil companies participated from 34 countries.
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