On March 7, 2017, the Mexican government, through the Comisión Nacional de Hidrocarburos (National Hydrocarbons Commission or “CNH”), commenced an international tender process to grant the right to enter into a production sharing agreement in partnership with the productive state-owned enterprise PEMEX Exploración y Producción, to pursue upstream activities in the shallow waters of the Ayín-Batsil fields.

This will be the second farmout agreement to be offered by the CNH as part of the historic reforms enacted by the Mexican government to open the oil & gas sector to private and foreign investment since 2013, following the awarding of the Tríon farmout to BHP Billiton Petróleo Operaciones de México, S. de R.L. de C.V. in the fourth quarter of 2016.

The international tender process identified as CNH-A2-AYIN-BATSIL/2017 is addressed to domestic and foreign private companies and comprises the auctioning of a 1,096 sq. km area located in the Cuenca del Sureste in the Gulf of Mexico, one of the main hydrocarbon producing regions in the country.

The pre-qualification documents are required to be filed by the interested parties between April 17 and 19, 2017 and pre-qualified bidders will be announced on May 26, 2017. The bids will be due and open on June 19, 2017, and the award will take place on June 21, 2017. A detailed calendar of the process is available at http://rondasmexico.gob.mx/a1-l02-calendario/ and contemplates two rounds of questions and answers.

The complete set of the bidding guidelines and pre-qualification criteria are available at http://rondasmexico.gob.mx/a1-l02-bases/.

The terms of the production sharing agreement to be awarded and joint operating agreement to be executed in connection therewith are available at http://rondasmexico.gob.mx/a1-l02-contratos/.

Special thanks to Ana María Alpízar, Shearman & Sterling Visiting Attorney, for her assistance with this alert.