Mexico Says No New Auctions Until 2021
Days ahead of taking office on December 1, Mexico’s incoming energy minister reiterated November 20 that bid rounds for oil and natural gas areas throughout the country will be paused until at least 2021.
Rocio Nahle, a former chemical engineer at state-owned Pemex, told Mexican media that “it would be irresponsible to continue handing over large pieces of territory to be awarded as development contracts when we don’t even have evaluation of the results” from previous contracts awarded.
The incoming administration of president-elect Andres Manuel Lopez Obrador (Amlo) wants to wait at least two years to evaluate the results of the contracts awarded during the current administration before holding new auctions, she said.
Since opening its energy industry to private and foreign investment in 2014, Mexico has held nine auctions and awarded more than 100 onshore and offshore contracts to companies such as ExxonMobil, Chevron and Shell. The energy ministry says more than US$100bn in potential investment is expected in Mexico as a result of the contracts.
Nahle said that Mexico’s planned onshore auctions of natural gas and oil development rights will also be canceled. The country was planning to auction 37 conventional onshore areas and nine shale gas areas in northern Mexico in February 2019, but because many of the contracts already awarded will take four or five years to develop any production, “in February, we won’t be giving out new contracts.”
Nahle said the contracts granted to private and foreign oil and natural gas producers during the current administration were too large, particularly when compared to offshore plots awarded in the US. She said Mexico will give the companies time to develop the fields, and in the meantime will dedicate more investment to Pemex, which has seen natural gas and oil production decline for several years.
In a radio interview November 21, Amlo said Mexico’s energy reforms since 2014 had been a “complete failure” and promised his administration would work to “rescue” Pemex and CFE, Mexico’s state-owned electric utility.
A week ago, Juan Carlos Zepeda, president of the National Hydrocarbons Commission, which conducts the rights auctions and overseas oil and gas developments, said he would be leaving his post on December 1, the day Amlo’s administration is sworn in and five months earlier than the end of his term. In his resignation letter, Zepeda said he will act as an adviser to Nahle as she transitions into her new role in the upcoming administration.