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.
