Mexico’s hydrocarbons industry has seen great change in the last two years. The oil and gas exploration and production licensing Round 1 is now well underway, with the latest auction round (Phase 3 of Round 1) in December 2015 seeing all 25 of the onshore blocks on offer being awarded. As 2016 gains momentum, the pace of change is not slowing as the world’s major players prepare themselves for Phase 4 of Round 1, in which 10 deep-water blocks in the Gulf of Mexico will be auctioned.
The National Hydrocarbons Commission (CNH) initiated the tendering process in January 2016 for these sought-after offshore blocks. Companies interested in participating in the auction have until mid-April to register for the bidding round in order to gain access to the data room containing information about the offshore blocks being offered. Data room access does not necessarily lead to interested companies going through the prequalification process, but given the potential lucrativeness of these offshore blocks and the competitiveness of Phase 3 of Round 1, it is likely that one will follow the other. The prequalification process is due to begin in mid-June, giving companies four more months to decide on their strategies and next steps.
There has been speculation in the industry, due to the downturn in the market, as to whether Phase 4 of Round 1 will meet the original timeline. Speaking at a conference in Houston last week, Mexico President Enrique Peña Nieto announced that the auction for the deep-water blocks will be held at the beginning of December later this year. Commenting on the impact of the low oil price, President Peña Nieto stated that “regardless of what happens in the international context, Mexico will move forward with the energy reform implementation,” emphasising his commitment to “accomplish its full, effective and timely implementation.”
It is an emphatic message from Mexico that the liberalisation of the hydrocarbons market will go ahead despite market turbulence, and a sign of confidence in the offshore blocks on offer in this latest bidding round. Although public information on the identity of those participating in this latest phase is not yet available, this bold statement by the Mexican President is perhaps an indication that the parties interested in data room access are some of the biggest names in the industry, recognising the potential value of this significant investment opportunity.
The latest statements from the Mexican President also include the opening of the gasoline market. State-controlled oil company PEMEX is currently the only entity capable of importing gasoline and diesel into the country. President Peña Nieto announced at the same conference last week that, as of 1 April this year, any company will be able to import such fuels, subject to obtaining the relevant permits and appropriate infrastructure. This step has been brought forward from its original date in 2017, reiterating the Mexican government’s commitment to energy sector reform and demonstrating confidence in the industry.