Mexican President Enrique Peña Nieto told delegates at this year’s IHS CERAWeek forum in Houston that the fourth phase of Mexico’s historic Round One, will go forward in early December.
The long-anticipated fourth phase of Round One will auction off 10 deepwater blocks, including four blocks on the Mexican side of the Perdido Fold Belt.
“This decision demonstrates and confirms the commitment of the Mexican government with the energy reform implementation, in a fast and decisive way,” Peña Nieto said. “Regardless of the oil price in the short-term, Mexico is decided to have the technological, financial and of risk management capability that the global oil industry has already developed for this type of large-scale projects.”
Peña Nieto primarily spoke at CERAWeek about the energy reform enacted by his government in 2013, which changed the country’s energy sector and opened it to foreign investment for the first time in seven decades. The president said the country remains committed to the energy reform regardless of low international oil prices.
“Just like I committed myself to achieve the energy reform, now I am committed to accomplish its full, effective and timely implementation,” he said.
But, the change doesn’t stop with bid rounds, it also spreads to the way Mexico’s state-owned oil and gas company, Pemex, does business. Peña Nieto spoke on the future of the company following his decision earlier this month to replace Pemex’s CEO of three years, Emilio Lozoya Austin with economist José Antonio González Anaya.
“Pemex is facing great challenges, but also major opportunities,” he said. “Like the other oil companies of the world, it has challenges driven by international low oil prices and it will have to overcome them through smart financial decisions.
“In this regard, Pemex will have to focus on cutting expenses and reaching greater efficiencies; it will have to prioritize investments; and above all, it will have to take advantage of the opportunities for new partnerships that the energy reform have created.”
The joint venture opportunities are a big part of the country’s equation to open the sector and reverse production declines. Pemex hit its production peak of 3.8 MMb/d in 2004, according to the US Energy Information Administration, and hasn’t achieved anything close since. According Pemex’s own numbers, the company produced 2.2 MMb/d in December 2015.
Francisco J. Monaldi, a fellow in Latin American Energy Policy for the Baker Institute at Rice University told OE that the farm-outs should be a priority in the fight to reverse declining oil production.
“These (farm-outs) are the only option where you could have some change within the next five years,” he says. “The deep offshore could take 7-10 years to deliver output. This, I think, is a priority, and was a part of the reform that was lagging with respect to what we had expected.”
Pemex’s new CEO, González, is due to speak at CERAWeek on Wednesday afternoon.
Peña Nieto signed off with a renewed effort to work with Mexico's neighbor, the US.
"Based on this process of deep change, we will continue to increase our economic and productive integration with the United States; and, working together, we will make of North America, the most competitive region of the world," he said.
Image: Enrique Peña Nieto addresses IHS CERAWeek 2016. Photo from Audrey Leon/OE Staff.
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