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Latino Daily News

Monday August 18, 2014

Mexico’s PEMEX Looks to Foreign Alliances

State-owned oil giant Petroleos Mexicanos, or Pemex, has had contacts with about 80 foreign energy companies about possible oil exploration and production partnerships, media reports said.

Pemex Exploracion y Produccion, or PEP, chief Gustavo Hernandez Garcia has met with representatives of Chevron, Shell, ExxonMobil, BP, Petrobras, Ecopetrol, Petronas, PetroChina and Petroleos de Venezuela, or PDVSA, among other companies.

“We have seen about 80 companies. All of them are interested ... We are interested in finding partners who have not just had success in deep waters, but who have been successful in the deep waters of the Gulf of Mexico,” Hernandez told Mexican media.

The National Hydrocarbons Commission will decide who the winning bidders are, but Pemex can make suggestions to avoid ending up with a partner who lacks experience working in the Gulf of Mexico, Hernandez said.

Pemex has also had contacts with Mexican firms interested in working on oil projects and the Business Coordinating Council, or CCE, has called for giving a role to domestic companies in the opening of the oil industry, Hernandez said.

President Enrique Peña Nieto signed a package of legislation last week to implement the December 2013 energy overhaul, which ended Pemex’s seven-decade monopoly over Mexico’s oil and gas business.

The Energy Secretariat assigned 83 percent of Mexico’s proved and probable, or 2P, reserves to Pemex as part of a historic energy industry overhaul and granted the state-owned company 21 percent of prospective resources.

Pemex has already identified 10 projects that it wants to develop with private firms over a 13-month period starting in November.

Pemex CEO Emilio Lozoya said last Wednesday that the company and the firms it worked with on oil projects would invest $76 billion over the next 10 years, with $33 billion going into 10 joint-venture projects with private firms, including deepwater drilling.

The government expects Pemex’s production to rise from the current 2.5 million barrels per day (bpd) to 3 million bpd by 2018 and 3.5 million bpd in 2025, Deputy Energy Secretary Lourdes Melgar said in a recent press conference.

Pemex’s partnerships with other companies are expected to account for a large percentage of the production increase, Melgar said.

“At the start, we will see a trend in which Pemex will dominate production, but this will go down over time. If we think about a 15-year period, we could expect about 30 percent of the additional production to come from companies other than Pemex,” Melgar said.

Mexico’s oil production has fallen by nearly 25 percent from a high of 3.3 million bpd in 2004 due to a sharp drop in output at the offshore Cantarell project, formerly Mexico’s most productive field, and a lack of investment.

The energy industry overhaul was aimed at reversing that decline by allowing private companies to develop crude reserves for the first time since 1938.

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