Mexico’s oil regulator awarded the first onshore contract up for grabs at Tuesday’s auction, a tender aimed at boosting start-up oil companies following a historic sector reform finalized last year. Mexican firm Compania Petrolera Perseus won the development rights to the 10.6 square mile (27.5 sq km) Tajon oil field in southern Tabasco state, by offering the government 60.88 percent of pre-tax profits beyond other tax and royalty payments.
Competing alone and in consortia, some 80 mostly Mexican companies pre-qualified for the onshore auction run by the National Hydrocarbons Commission (CNH). But only half registered to bid on the contracts. Part of the so-called Round One tender, the auction featuring 25 license contracts comes as the price of Mexico’s mostly heavy crude export mix has plunged more than 70 percent since last year to less than $28 per barrel.
Under the circumstances, Mexican officials have said they would consider the auction a success if at least five contracts are assigned. The CNH awards contracts based on which bidder offers the biggest share of pre-tax profits to the government via a weighted formula that also includes an investment commitment.
The share of profits is 90 percent of the formula, while the investment commitment accounts for the rest. The energy reform ended national oil company Pemex’s monopoly on crude production and aims to reverse a decade-long slide in output by luring new expertise and private investment.