Mexican national oil company Pemex on Dec. 8 blamed the cancellation of a potentially lucrative deepwater Gulf of Mexico project on weak investor appetite due to competition from recent auctions in Brazil and low oil prices.
The country’s oil regulator on Dec. 7 canceled a tender for its Nobilis-Maximino project, a joint venture with Pemex, as company interest was not as robust as initially expected.
On Dec. 8 Pemex cited a late October deepwater oil auction in Brazil for lessening interest in its project. Six of eight blocks in Brazil were awarded to majors, including Royal Dutch Shell and ExxonMobil.
“(One) factor that affected appetite for new projects was the investment commitment recently taken on by possible bidders,” Pemex said in a statement. Companies that won blocks in Brazil had looked at the Nobilis-Maximino data, it added.
Nearly 30 oil companies had begun the process of pre-qualifying for the Mexican auction, according to data from the National Hydrocarbon Commission, including U.S.-based Chevron and Britain’s BP.
The failure of the project is a setback for Mexico’s energy opening after a decades-long monopoly for Pemex.
Nobilis-Maximino sits in Mexico’s deepwater Gulf near the U.S.-Mexico maritime border in the productive Perdido Fold Belt and is estimated to contain reserves of about 502 million barrels of mostly light crude.
More Fields Up
Nobilis-Maximino was due to be awarded on Jan. 31, along with another 29 similar deepwater projects. Those tenders, which are still going ahead, are potentially more attractive because companies can bid to develop them without tying up with Pemex.
Pemex said weak oil prices—with medium- and long-term oil price projections at $50-$65 per barrel— have also been a factor in oil companies exercising caution about taking on complicated, expensive deepwater projects like Nobilis-Maximino.
Pemex said it would consider a future farm-out, or joint venture, for the project.
“Pemex will continue to promote its partnership strategy in several oil fields that present less technical difficulties and lower risks,” the company said.
A landmark 2013-2014 energy reform allowed the firm to enter into equity partnerships with foreign and private producers for the first time, which had previously been barred by law.
The regulator selects Pemex’s partners via open auctions.
Late last year, Pemex cemented its first-ever joint venture in the deepwater Gulf with the tender of partnership rights to BHP Billiton at the $11 billion Trion project, located near Nobilis-Maximino.