Mexico opens bids on 1st integrated oil contracts

AP News
|
Posted: Mar 01, 2011 6:28 PM
Mexico opens bids on 1st integrated oil contracts

State oil company Pemex announced on Tuesday the first "integrated" exploration and production contracts, which allow greater private involvement in the tightly controlled sector.

Petroleos Mexicanos is offering six fields in three areas that produced lots of oil in the 1960s but have been largely ignored since then.

The company said the fields in the Gulf coast state of Tabasco currently produce about 13,000 barrels per day but could yield as much as 50,000 with the right technology.

They have probable reserves of about 200 million barrels of crude equivalent, according to the company.

So-called integrated contracts _ under which companies take responsibility for a broad range of services and are paid at least in part based on performance _ were approved in October 2008 after a heated debate and protests by Mexicans worried about ceding control over an important symbol of national sovereignty.

Mexico has used private contractors for decades, but financial arrangements have largely been restricted to fixed payments for a given service.

In the future, Pemex is hoping that the integrated contracts will attract badly need private financing and expertise for deep-water exploration as Mexico's more easily tapped reserves decline.

Mexico's proven, probable and potential reserves stood at about 43 billion barrels in 2010. But of that total, proven reserves were only about 14 billion barrels _ and that could be exhausted in little more than a decade, officials have warned, unless deep-water exploration is carried out.

The contracts offered Tuesday are on land, however.

Mexico's oil production has fallen about 16 percent since 2007, from about 3.1 million barrels per day that year to 2.57 million barrels a day in 2010.

Oil is the country's biggest source of foreign income and finances about 40 percent of its annual budget.