Mexico delays next oilfield auctions after recent major discoveries

18 July, 2017

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Mexican authorities plan to delay the next offshore oilfield auctions by a month in order to give bidders more time to evaluate two recent major crude discoveries that highlight the potential value of the assets at play.

In an interview with Bloomberg, Juan Carlos Zepeda, head of the National Hydrocarbons Commission, said the next deep water auction will be held in January 2018 instead of December as originally planned. Mexico will announce the fields and acreage amounts for its next deep water auction "in a few days," he added.

Last week a joint venture by Premier Oil Plc, Sierra Oil & Gas and Talos Energy LLC reported to have found a reservoir with an estimated 1.4 billion to 2 billion barrels of oil in the Zama-1 well, located in the southern Gulf of Mexico.

The reservoir turned out to be “multiples of what we thought,” said Tim Duncan, the CEO of Talos Energy, in an interview with Forbes. It’s “similar in size and quality to fields that were discovered in the U.S. gulf back in the late 1970s and early ‘80s” he added.

The announcement eclipsed another finding by Italian oil giant Eni, which revealed it too had found a billion barrels drilling in the Bay of Campeche.

“Eni has successfully drilled and tested the Amoca-3 well in the shallow waters of Campeche Bay, in offshore Mexico. It has proven the presence of multiple significant oil levels in the Orca and Cinco Presidentes Formations,” said the company in a press release.

The Talos-led discovery is expected to produce crude in three to four years, while Eni plans to accelerate development as it expects production by as soon as 2019. The Mexican government will keep as much as 90% of the profits earned by the Eni project and around 83% of those generated from the Talos consortium, revealed Bloomberg citing a statement from the Energy Ministry.

Due to those recent discoveries, the Mexican government wants to give potential players plenty of time to digest all the new data before they bid for new leases in the region.

"There was already interest to come, explore and work in the Gulf of Mexico before these finds, but now to have discoveries in such a short time, interest of international entrants to have activity in Mexico has renewed," said Zepeda to Bloomberg.

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