Document shows that Mexico's Pemex awarded five contracts to boost oil production, but failed to attract big players.
According to sources familiar with the situation and a document viewed by us, the Mexican state oil company Pemex awarded five out of the 11 joint venture contracts that it planned to sign before the year's end. Pemex, however, was unable attract major companies and the production that these ventures could add appears to be too small to help Mexico reverse its declining crude oil production. Pemex is trying to convince investors who are reluctant to sign up for 21 new joint ventures that could produce 450,000 barrels of crude oil per day, or about a quarter its projected output by 2033.
One source said that "so far, it hasn't worked out as expected." She added that the contract model had not been attractive to the major players. "The production of those projects won't make a difference to?Pemex."
They are known as mixed contracts and will be signed by the Mexican government on December 19. This would be a first for Mexico.
The status of six other contracts is unclear
The undated document, which bears the?logos? of the Mexican Government and Pemex lists the companies who bid for contracts and the winners of each of the onshore projects listed: Tupilco Terciario, Sini-Caparroso, Cuervito,?Agua Fra; and Tamaulipas constituciones.
Four sources have confirmed the authenticity of this document.
The document didn't say what happened to the six other contracts Pemex said it would secure. Pemex refused to comment on this matter. It had said that it anticipated the 11 contracts would add nearly 70,000 bpd to this year's production.
The document stated that Pemex would have a majority of 'local companies' as partners on the first five contracts. State company stakes would range between 40 and 85%.
The details of the contract, including its value and Pemex’s participation, were not previously reported.
The document stated that Consorcio Petrolero 5M del Golfo had won two contracts, while Geolis Petrolera Miahuapan, and Cesigsa each won one. Pemex will receive $50 million as a sign-up bonus from these companies.
Consorcio 5M del golfo does not have a website and LinkedIn messages sent to the company were unanswered. Geolis Petrolera Miahuapan, and Cesigsa have not responded to requests for comments.
The contract model was not clear about what services each company would provide. However, the core idea is that the companies will develop fields with Pemex.
Pemex is responsible for the commercialization of hydrocarbons under the new model.
PEMEX PRODUCTION?FALLS
The heavily indebted firm has struggled over the past few years to maintain its crude oil and condensate production of 1.6 mbpd, which is a sharp drop from the 3.4 million bpd that it produced 20 years ago.
Claudia Sheinbaum, the Mexican president, has stated that she expects Pemex to dominate national production and reach 1.8 millions bpd by 2030.
Pemex may try to award a few more?contracts in the coming week, according to a source who spoke under the condition of anonymity, as the information was not public.
The modest results contrast sharply with the interest that Mexico's oil exploration and production projects attracted from the largest oil companies in the world during the administration of former president Enrique Pena Nieto.
Recently reported that Pemex’s heavy debt load and certain conditions attached to the model of contract could be an obstruction to reaching production goals.
Pemex, however, has stated that the conditions are important to it and its revenue contribution to the state coffers.
The strategic plan for Pemex presented in August states that "this contribution is important both to stabilize the base production, to compensate for the declining of mature fields, and to ensure compliance with the nation's energy commitments."
(source: Reuters)
