PEMEX hopes to attract its first consortium of international majors, for Trion farm out
As Mexico continues the privatization of its oil and gas sector, state-run PEMEX is seeking international oil majors to help develop the country’s more technically challenging offshore assets. Among the first that PEMEX is looking to develop in cooperation with other companies is the Trion light oil field in the Perdido Fold Belt at a depth of 2,500 meters (about 8,200 feet).
The term of the joint operating agreement (JOA) contract will be 35 years from the date of execution of the contract, which can be extended up to a maximum of 50 years with a minimum investment to be assumed by the awarded bidder on behalf of PEMEX of $464 million, according to a Mexico Energy Alert released by Haynes and Boone.
Operators hoping to bid on the block must have assets totaling $25 billion and an investment-grade credit rating or a total equity of $5 billion and investment in projects cumulatively totaling at least $2 billion. Non-operators must evidence total net equity of $250 million.
The steep capital requirements will exclude all but international majors, but the Mexican government has been amending the terms of the auction, which is set for December, in order to make it more attractive. Those changes included PEMEX reducing its stake in the field to 40% from 45%, the state-run company would be liable for any pre-existing damage at the site, and that the seat of arbitration for disputes would be moved to Calgary, Alberta, from Mexico, reports Reuters.
“A lot of thought has been put into these JOAs to attract the kind of international investment that is needed,” Haynes and Boone Partner Ricardo Garcia-Moreno told Oil & Gas 360®. “PEMEX does not have the money to exploit the deep water and ultra-deep water opportunities, so they want to make this as attractive as they can. It’s not going to be perfect, but it will be a process that will develop starting with Trion.”
The Trion field is reported to have 3P reserves estimated at 485 million barrels of crude oil equivalent.
