Within just more than five months, if all goes as planned, a clearer picture of which areas will be available during upcoming licensing rounds could emerge for companies eager to enter Mexico’s newly opened oil and gas scene.

Mexico’s energy ministry has 180 days—until Sept. 17—to evaluate Pemex’s proposal and provide the state-run oil company with entitlements. Pemex is requesting 83% of the country’s 2P reserves and 31% of prospective resources.

The company, which touts its shallow-water E&P capabilities, has struggled to overcome decades of declining production. The country’s potential is perhaps greatest in the areas of deepwater and unconventional resources, both are which are likely to attract international interest if secondary legislation moving through congress turns out favorable for foreign investors.

In order to get what it requested, “Pemex has to demonstrate that it has the technical, financial and operational capacities needed to explore and produce hydrocarbons in a sufficient and competitive manner,” Maria de Lourdes Melgar, undersecretary of hydrocarbons for the Ministry of Energy, said during a conference call March 28 about Round Zero, the round in which areas are set aside for Pemex.

The energy ministry will make the decision with technical input from the National Hydrocarbon Commission.

“It’s like a coin which has two sides,” Melgar said. “On one hand, we need to strengthen Pemex providing the necessary resources to ensure current levels of production in an efficient manner, and that includes reserves. This is the first step toward converting Pemex into a productive state enterprise. On the other hand, from the prospective of the state, we need to multiply investments in E&P, increasing the number of players and creating a new oil industry which will allow us to increase production and reserves.”

Pemex believes its request does both.

“To comply with the Sixth Transitory Article, Pemex has maintained a balanced position between the sustainability of the company and the growth of the national oil industry, according to the principles of the energy reform,” according to Gustavo Hernández, acting E&P director for Pemex.

Keeping major exploration areas and producing fields, leaving exploration opportunities for new discoveries and requesting deepwater and unconventional areas—which represent more than 70% of the country’s prospective resources—will strengthen Pemex, he said. Identifying areas and fields where partners will be needed to explore and develop resources, allowing Pemex to gain knowledge in the process, illustrates the company wants to keep the door open to private investors to help improve the state of the country’s oil and gas sector.

“Pemex is not requesting areas and fields where limited activities have been programmed, but that could be attractive for private investment,” Hernández said, adding, “for example, most of the areas with potential on unconventional resources and some other areas in deepwater basins.”

Mexico is believed to have 156.6 Bboe of hydrocarbon resources, of which 112.8 Bboe are considered prospective resources.

“We are requesting 31% [of prospective resources]. That accounts for 34.5 billion barrels,” Hernández said. “There are still lots of opportunities for other players to come to explore and to convert these prospective resources—both conventional and unconventional—accounting for 78 billion barrels to be discovered.”

There are about 24.8 Bboe in shallow-water and onshore resource as well as 27.8 Bboe of deepwater conventional resources, while there are 60.2 Bboe of unconventional resources.

Hernández also explained the strategy behind Pemex’s request. In assessing the company’s exploration portfolio, he explained how areas were evaluated based on technical and geological risks.

Unconventional resources such has shale and heavy oil were categorized as high technical and low-medium geological risk, while areas where the oil play model is unproved—Pakal, Han and Tiancanan—were called high geological, medium-high technical risk. Exploration areas near existing infrastructure—Campeche, Burgos, Comalcalco and Llvae—were deemed low-medium technical, low geological risk. Areas of medium technical and geological risk—opportunities for growth—included the Chalabil, Uchukil, Holok, Alosa and Perdido areas.

“Riskier projects tend to be good candidates for leverage with partners to provide technical expertise and risk capital,” according to his presentation.

Considering Pemex’s high expertise in onshore conventional oil and gas, Hernández said, “Mostly high profitable fields have been requested, and fields with limited profitability have been requested under strategic considerations.”

Pemex considers its Chicontepec Field an asset with high strategic value because it accounts for a little more than one-third of the country’s total reserves. “But we have to recognize that it has high technical complexity,” Hernández said. “In Chicontepec, we have fields with substantial development and [that are] operating under existing contracts. That’s the reason that we are requesting it.”

Pemex also requested shallow-water fields with significant profitability and fields under development. The company also seeks to retain extra-heavy oil shallow-water fields in which it has made investments and continued development of deepwater Gas Basin fields as well as oil fields in the Perdido area.

In all, the company aims to keep oil production above 2.5 MMbbl/d and gas production above 5 Bcf/d, have a 1P reserves replacement rate equal to or above 100% and maintain competitive costs, according to Hernández’s presentation.

The company will be able to keep areas where it has made commercial discoveries and exploration investments. “In terms of production, Pemex will be able to keep all fields in production as of Dec. 21, 2013, which is the date that the constitutional amendment entered into force,” Melgar said. “In terms of relinquishment, when a field does not reach commercial discoveries within three years plus an extension of two, that is five years, Pemex will not be able to keep that field.”

She added that after the ministry reaches a decision, Pemex gets its entitlement and secondary legislation is approved by Congress, Pemex will be able to farm out assets.

Mexico plans to conduct bidding rounds for areas not assigned to Pemex beginning in 2015, holding one round per year. However, authorities are considering having more than one round annually for shale oil and shale gas, according to Melgar.

Contact the author, Velda Addison, at vaddison@hartenergy.com.