CNH approved the cancelation of the Bidding CNH-A6-7-Asociaciones/2018, which purpose was to
select Pemex’s partner to develop 7 blocks located in Chiapas, Tabasco and Veracruz,
mainly Light Oil (405.1 mmboe of 3P).
It is not the first time that the regulator cancelled a Bidding process. The lack of interest shown for the block Nobilis-Maximino, resulted also in the cancellation of its process (December 2017). On this occasion, Pemex withdrawn its interest stating that:
“[it] has considered adequate [to] continue carry on the petroleum activities in the contractual areas of the Bidding CNH-A6-7-Asociaciones/2018 under the corresponding Asignaciones […],the budget granted […] will allow the attention of a bigger number of projects […], new schemes of business under the Asignaciones will be evaluated”.
The Ministry of Energy agreed “Without the 7 contractual areas, the Bidding, […] is left without purpose”.
It is a fact that the budget assigned to Pemex this year (USD$13,849.3 million) and the rest of the financing measures implemented are not enough to face its debt, and the compromises announced by the administration. An additional income had contributed to achieve them. 3 farm-outs represented an income of USD$1,733.5 million for the State Productive Enterprise.
Developing these Asiganciones, with the private industry, had represented a big opportunity to: i) enhance Pemex´s technical, financial and operative capabilities; ii) incorporate reserves; iii) add production to the 2024-goal (2.5 MM bpoe); iii) provide certainty to the foreign investment, and more importantly, iv) benefit to the Mexican economy.
As, Commissioner Sergio Pimentel mentioned, “everybody wants a strong Pemex”. Service Contracts and Bidding process has been proved; however, the results were not the same.
Source: 32th Extraordinary Session of 2019, CNH.
Muvoil Consulting is a group of specialists in the O&G sector: legal, fiscal, social and environmental. Our multidisciplinary approach allows us to design strategic solutions that can unravel the most complex regulatory and transactional challenges that a petroleum project can face. Do not hesitate to contact us for further details.