Mexico: four more Oil & Gas auctions for 2018

HSE International, LLC

Mexico could launch up to four more oil and gas auctions before the end of 2018. The tender could include shallow-water fields as well as gas-rich shale areas. The government had previously mentioned three more tenders were planned, but a fourth could be a mix of fields including some deep-water areas.

Round 2.3 - Depp Water

This bid round includes 30 deep-water blocks for exploration in the Perdido Area, Salinas Basin, Mexican Mountain Chains (Cordilleras Mexicanas) and the Yucatan Platform, collectively an area three times the area for deep-water Round 1.4. Most of the blocks have an area of 2,000 square kilometers. The blocks in this Round will be awarded based on a license contract and include wet gas and dry gas, which will help reduce imports. The presentation and opening of proposals is scheduled for January 31, 2018.

Round 3.1 - Shallow Water

35 shallow water contractual areas under Production Shared Contracts integrate round 3.1. These contractual areas are divided into three sectors: Burgos, Tampico-Misantla-Veracruz and Cuencas del Suereste basins. These blocks have a range of prospective resources ranging from light to heavy crudes, as well wet and dry gas blocks. The auction is scheduled for March 27, 2018.

HSE International has performed dozens of offshore and onshore assignments in Mexico providing H&S, Environmental and Social (HSES) support services to the Oil and Gas industry. Some examples include:

• Risk assessment and regulatory advice
• Permitting planning and compliance (ASEA, SENER, CNH, other agencies)
• Social and environmental baseline and impact assessment
• Strategic social and environmental performance project
• Sustainability-seeking management systems with IFC PS and WBG EHS Guidelines
• Locality strategy design and implementation for sustainable development
• Due diligence
• In-country support to offshore and on-shore oil and gas activities
• Training

HSE International supports clients with a contextualized, integrated and cost-effective approach, delivering innovative solutions and helping clients manage their risks in a way that is culturally and locally savvy.  Learn more about the services we offer and our extensive international experience spanning 35 countries, including Mexico.

solutions@hseinternational.com (+1) 281.971.5909 www.hseinternational.com

What's next for Mexico’s Oil and Gas E&P “Apertura”

The next bidding round in the opening of Mexico's oil and gas sector, named 2.1, will be called by the end of July and consist of 15 shallow-water blocks for exploration and extraction work in the Gulf of Mexico.

The following round, or 2.2, would be called by the end of the summer and consist of of 14 onshore blocks for E&P work in the gas-rich Burgos Basin in the north of the country, as well as in southeast Mexico, according to government officials.

Rounds 2.1 and 2.2 may result in a higher proportion of contracts being awarded. However, companies will remain cautious, seeking to secure more attractive conditions for unconventional contracts, due to low oil prices ($44 per barrel as of July 19th), and social and security risks of operating in Mexico.

The situation is not unlike many other experiences in newly opened regions of Latin America and other continents, in which community relations and security risks continue to emerge as critical issues for the energy sector.

Experience says that those projects that have suffered delays and cost overruns during the initial phases are likely to be overwhelmed with problems during subsequent project phases.

Successful bidders (specially the international oil companies - IOC, to be operating in Mexico’s oil and gas sector) will face challenges that have the potential to escalate very rapidly.

This is mainly due to the lack of appropriate and timely engagement and information that is available to communities and local stakeholders who may also feel their grievances in the past have not been adequately considered.

To avoid these situations, there is a need for the Government to conduct strategic assessments and engagement, and promote the implementation of good international industry practices.

The IOCs need to develop and adopt “entry strategies” and early engagement with communities and other stakeholders. The strategy should be based on a sustainable development framework that integrates the result of social, environmental, political, and institutional analysis, to improve the understanding of the linkages between development dynamics and social structures that shape development outcome. 

These challenges and stakeholder expectations require a contextualized and integrated approach, and innovative solutions to manage the sustainability non-technical risks to ensure the success of the oil and gas business ventures in Mexico.

How HSE International, LLC can help

HSE International uses its sector-focused approach, deep knowledge and experience of the oil and gas industry operating in complex social settings, and international delivery capabilities, including local strategic partners to help our clients.

HSE International has worked in the Mexico’s oil and gas sector since 2008, including supporting IOCs, NOCs and Regulators, along the oil and gas value chain. We have developed a process to address social, environmental, security and safety risks each step of the way, and are eager to contribute to a more sustainable development of the oil and gas sector in Mexico. 

For more information email us at: solutions@hseinternational.com