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Mexico postpones auction rounds so incoming Lopez Obrador administration can review terms

Mexico City — Mexico has postponed three auction rounds slated for later this year, opening the door for the incoming presidential administration of Andres Manuel Lopez Obrador to modify contractual terms.

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National Hydrocarbon Commission members Wednesday approved delaying to February 14, 2019, from September 27 of this year the CNH's date for awarding auction rounds 3.2 and 3.3 and to delay state Pemex's onshore farmout cluster from October 31.

"We see as very positive postponing these auction rounds as we are entering into a contract revision process with the incoming administration," CNH President Commissioner Juan Carlos Zepeda Molina said during the televised session.

Lopez Obrador's energy team wants to review the bidding process as well as the terms of signed contracts and the contract terms of these three auction rounds.

"Postponing the auctions to talk with the incoming government gives more certainty to registered or companies planning to participate," CNH Commissioner Hector Acosta said during the session.

Zepeda said he has not met with the incoming administration, but based on news reports, Lopez Obrador wants to increase national content on upstream contracts.

"These onshore auction rounds have the proper conditions to increase national content further as the incoming administration desires," Zepeda said.

This is the second time CNH has postponed the awarding date for rounds 3.2 and 3.3. Their original awarding dates were July 25 and September 1, respectively.

In Round 3.2, Mexico is offering 37 conventional onshore blocks with a total area of 9,500 sq km, with 260 million boe of prospective resources and 219 million boe of remaining resources in 17 fields. In Round 3.3, CNH is auctioning nine shale blocks with a total acreage of 2,700 sq km with 1.16 billion boe of prospective wet and dry gas resources.

Pemex is auctioning seven onshore clusters in southern Mexico with a combined 391 million boe of proved and probable plus possible (3P) reserves as well as 683 million boe of prospective resources. According to CNH, the seven clusters produced 33,000 b/d of oil and 190 MMcf/d in March, and after being farmed out, they are expected to reach peak production of 58,000 b/d and 310 MMcf/d by 2022-2023.

Commissioners also said that postponing these auction rounds will give further time for companies to register in the auction.

Twenty companies have accessed the data room, but only 13 companies have registered for Round 3.2 and six companies have accessed the data, but only three has registered at Round 3.3, CNH said during the session.

The CNH didn't say how many companies registered to bid for Pemex's farmout auction round.

"Registered companies requested to postpone these auction rounds to give them further time to analyze the number of blocks being offered," Zepeda said. --Daniel Rodriguez, newsdesk@spglobal.com

--Edited by Richard Rubin, newsdesk@spglobal.com