Mexico: Energy Reform Round Zero And Round One

Last Updated: 17 September 2014
Article by Juan Carlos Machorro

On August 13, 2014 as a result of the announcement by the Federal Executive Branch in the act of issuing the package of federal legislation in energy matters on August 11, 2014, the head of the Ministry of Energy ("SENER") presented the results of the analysis of the request formulated by Petróleos Mexicanos ("Pemex") on March 17 on the development of certain fields, as part of the process called Round Zero, as well as the fields that will be included in the public bidding processes that will make up Round One.

This analysis was done by SENER, with the technical assistance of the National Oil and Gas Commission, and its purpose was to determine the technical, financial and operative capacity of Pemex to carry out activities of oil and gas exploration and extraction in particular fields.

Round Zero

The head of SENER indicated that Pemex was granted 100% of what it requested in the so-called "2P Reserves"1, which is to say the equivalent to 83% of all of such 2P Reserves of the country, which would represent resources for approximately 20.5 million barrels of crude petroleum. Furthermore, Pemex was granted 21% of the prospective resources2 of Mexico, the equivalent of 22,126 million barrels of crude, only 67% of what Pemex requested.

It was explained that the majority of the resources that were granted to Pemex are concentrated in shallow water deposits, while in deep water, where the oil company does not have experience, few fields were granted. In the case of deep water, 42% of the prospective resources were granted to it.

Among the areas granted to Pemex are Cinturón Plegado Perdido, in deep water in the north of the Gulf of Mexico, with 3,013 million bep.3 in prospective resources; Holok and Han, in deep water in the south of the Gulf of Mexico, with 2P Reserves of 397 million bep. and prospective resources of 1,824 million bep.; Burgos and Sabinas, land fields in northeast Mexico, with 2P Reserves of 425 million bep.; Ébano, Pánuco, Faja de Oro and Chicontepec, land fields in northeast Mexico with 2P Reserves of 3,815 million bep.; land fields on the southern coast of the Gulf with 2P Reserves of 4,579 million bep. and prospective resources of 5,913 million bep.; shallow water and extra-heavy oils, marine areas in the south and north of the Gulf of Mexico that include the petroleum fields of Cantarell and Ku Maloop Zaap, this block includes 2P Reserves of 11,374 million bep. and prospective resources of 7,472 million bep.; and non-conventional fields, in land areas in the east and north of Mexico with prospective resources of 3,904 million bep.

Round One

With respect to Round One, SENER resolved that 156 blocks will be offered, of which 96 correspond to exploration projects and 60 to extraction. Among the areas assigned are Perdido, in deep water in the Gulf of Mexico, Chicontepec (non-conventional fields and southeast basins) and some blocks in the Burgos Basin. The Round One fields that were indicated will be discussed with private sector companies and the definitive list will be issued this November.

It is estimated that this November 14 the preliminary terms for bidding will be presented, on which date SENER must know exactly what fields it will request bids on and their characteristics. It will also provide the details on the fiscal model and the contracting model, in what will be the first involvement with private sector companies. Subsequently, in the month of February 2015 the terms for bidding will be presented and it is estimated that between May and September of 2015 the awarding of such bids will be made known. Finally, it is estimated that in September 2015 the deep water fields will be delivered, it being expected that before that date the mature fields, shallow water, land and heavy crude fields will be granted.

SENER expects that with these open bids (including those in which the private sector may or must be associated with Pemex) will attract 50,000 million dollars of investment between 2015 and 2018. Even though the above described agenda may seem aggressive, we consider that it is feasible since it is basically in the hands of the Federal Executive Branch to achieve the targets set.

Footnotes

1 The reserves are defined as those quantities of oil and gas that are expected to be recovered commercially from known accumulations as of a particular date. Therefore, the concept of reserves includes only the recoverable and exploitable part of petroleum resources in a particular time period. Thus, it is important to clarify that some of the non-recoverable portions of the original volume of oil and gas can be considered reserves, depending on the economic, technological or other conditions, which change them into recoverable volumes. The proven reserves, or 1P reserves are defined as the volume of oil and gas or associated substances evaluated at atmospheric conditions and under current economic conditions, that is estimated will be commercially recoverable on a specific date, with reasonable certainty, derived from the analysis of geological and engineering information. There are two types of proven reserves: 1) those developed, which are expected to be recovered from the existing wells with the current infrastructure and with moderate investment costs; and 2) those undeveloped, which are defined as the volume it is expected to produce with future infrastructure and in future wells. There are also two types of unproven reserves: 1) the probable reserves and 2) the possible reserves. The first are made up of those volumes of oil and gas for which the analysis of the geological and engineering information suggests that they are more likely to be commercially recoverable than not. If probabilistic methods are used for their evaluation there will be at least a 50% probability that the quantities to recover are equal to or greater than the sum of the proven reserves plus the probable reserves. The 2P Reserves, therefore, include the sum of the proven reserves plus the probable reserves. The second, in contrast, are characterized by having a commercial recovery, estimated from the geological and engineering information, less than is the case of the probable reserves. Thus, if probabilistic methods are used, the sum of the proven reserves, probable plus the possible will have at least a probability of 10% that the quantities actually recovered are equal or greater. Consequently, the 3P reserves are calculated from the sum of the proven reserves plus the probable plus the possible.

2 The prospective resources are those whose existence can be inferred from technical information.

3 Barrel equivalent of petroleum.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.