Mexico to lure $50.5 billion in celebrated oil tender

Mexico expects to attract $50.5 billion in new private and foreign investment by 2018 as part of a historic opening of its oil sector that begins next year with a first round of contracts. The round one tender will offer up 169 exploration and extraction blocks, including a mix of both onshore and offshore areas, and cover a total of 28,500 square km.

The tender will be organized by Mexico’s national hydrocarbons commission and will happen as early as May 2015 and no later than September, said Juan Carlos Zepeda, commission president.

The landmark tender will prioritize areas that boost output quickly and leave trickier deep water projects for later. Separately, the energy ministry assigned 83 percent of Mexico’s probable and possible reserves to Pemex under a round zero allocation.

The allocation provides the Mexican oil company with a new, slimmed-down portfolio of assets to develop on its own or enter into joint ventures with international oil majors such Chevron and BP Plc.

The rounds are among the first steps of an energy overhaul championed by President Enrique Pena Nieto to break Pemex’s 75-year-old monopoly and reverse a decade-long slide in crude output.

The total area assigned to Pemex under Round Zero is equal to 20.6 billion barrels of proven and probable oil reserves. But the company was also given prospective resources totaling 22.1 billion barrels of oil equivalent covering 90,000 square km.

Mexico is the world’s 10th largest crude producer, but since hitting peak production of 3.38 million bpd in 2004, output slipped to 2.52 million bpd last year. Last month, Pemex revised its output forecast for this year down to 2.44 million bpd.

Pemex will by February 2015 seek new contractual arrangements for 11 fields it was assigned to take advantage of a more favorable tax structure under the reform. The company will also seek tie-ups for projects at particularly complex, costly fields, including heavy oil offshore areas, large deep water gas developments and some acreage in the deep water Perdido Fold Belt.