Category:

Mexico And Brazil Oil Auction Failures Are Further Proof Of Peak Oil At Current Prices

Summary Mexico’s first attempt to open up its oil industry to foreign companies was a failure. Its auction only attracted $2.6 billion in potential investments, compared to $17 billion maximum potential. Brazil had a similar failure more recently, with only 10% of its blocks being auctioned receiving viable bids. These latest failed auctions, coupled with other facts point to a permanent peak in oil production at current prices, which is unfolding presently, which will only reverse once prices rise. By far the most spectacular and talked about trend since the oil price collapsed more than a year ago, is the dramatic decline in drilling that occurred in the United States since the beginning of this year. For many months, we have been hearing about the resiliency of the shale industry, fueled by the delay in reaction of the industry in response to declining prices. At first, there was a […]

Posted On : Published By : Tom Whipple
Category:

Eni takes lead in new Mexican oil era

Eni among early entrants into a reforming offshore Mexican oil sector. Photo by project1photography/Shutterstock MEXICO CITY, Oct. 1 (UPI) — Italian energy company Eni said it secured a production sharing contract to help develop oil fields off the eastern coast of Mexico. Eni said it won all of the shares in three oil fields included under what the Mexican government categorized as Area 1 during the latest government auction. The Italian company said the combined reserves for the three fields are approximately 800 million barrels of oil and 480 billion cubic feet of associated gas. Eni said it would move quickly on an appraisal campaign to confirm the reserve estimates with the ultimate goal of fast-track development. "Area 1 will be operated by the new company Eni Mexico," the company added. Eni was among the largest winners in the Mexican auction. The Wall Street Journal reports two areas on […]

Posted On : Published By : Tom Whipple
Category:

U.S. Is Net Oil Exporter to Mexico for First Time in Two Decades

The U.S. became a net oil exporter to Mexico for the first time in more than 20 years as output from shale fields pushed the world’s biggest consumer toward energy independence. Net exports — comprising only oil products since the U.S. bans most shipments of crude — totaled 48,000 barrels a day in July, the U.S. Energy Information Administration said in data released Wednesday. A decade ago, the country bought a net 1.3 million barrels of oil from its southern neighbor. The emergence of the U.S. as a net supplier to Mexico underscores how the growth of the shale industry is redrawing the global energy map. Output from shale rocks pushed U.S. oil production to a three-decade high earlier this year, driving down prices, boosting margins for refiners and fueling a debate over whether the country should lift restrictions on exports of crude. U.S. net oil imports from Mexico […]

Posted On : Published By : Tom Whipple
Category:

Successful Auction for Oil Drilling Rights in Mexico Follows Weak Debut

Photo An official from Eni, the Italian oil company, at Wednesday’s auction for Mexican drilling leases. Credit Ronaldo Schemidt/Agence France-Presse — Getty Images MEXICO CITY — As the price of oil was plummeting in July, the Mexican government auctioned off leases to explore blocks in the Gulf of Mexico. With energy companies retrenching, the auction was a failure . But Mexico’s fortunes changed on Wednesday. In a follow-up auction, the Mexican government put five production blocks up for bid and awarded contracts for three, well above the average for similar auctions in Latin America. The success of Wednesday’s bidding appeared to put the government’s new oil policy back on track. Mexico has ended more than 75 years of a state monopoly to invite in foreign investment in an attempt to end a decade-long decline in oil production. Investors were attracted by relaxed rules and by the characteristics of the […]

Posted On : Published By : Tom Whipple
Category:

Mexico Defies Oil Price Slump as 60 Percent of Fields Auctioned

Italy’s Eni SpA was among companies winning rights to produce oil in the shallow waters off Mexico’s Gulf coast as the country’s second auction drew more bids for more money than expected. The National Hydrocarbons Commission awarded three out of five Gulf of Mexico offshore contracts to Eni’s ENI International B.V. and two company partnerships with bids that, on average, were double the government’s announced minimum take. The contracts for 60 percent of blocks auctioned was higher than the government’s goal of 30 to 50 percent. Eni won rights to three fields off the coast of Tabasco. Argentinian companies Pan American Energy LLC and E&P Hidrocarburos y Servicios partnered for a bid to win another block off Tabasco’s coast. A consortium formed by Mexican billionaire Alberto Bailleres’ Petrobal S.A.P.I. de C.V. and Fieldwood Energy LLC of the U.S. won a third area with no contesting bids. Two other areas […]

Posted On : Published By : Tom Whipple
Category:

After Oil Auction Snub, Mexico Sweetens Pot — But Is It Enough?

Mexico is sweetening the terms of its next oil-block auction in a bid to avoid a repeat of its failed earlier attempt at opening up the industry. The big question now: Is it enough? Investors will answer that question in a sale on Wednesday of shallow-water exploration and production blocks, only the nation’s second since it nationalized its oil industry in 1938. After global energy giants Exxon Mobil Corp., Chevron Corp. and Total SA sat out the first auction in July, Mexico rewrote the rules. This time around, the blocks are bigger, the financial terms less rigid and the government’s slice of the profits smaller. Even with the improved auction terms, Mexico is fighting global headwinds that could hurt the outcome, said Fadel Gheit, an analyst at Oppenheimer & Co. in New York. Oil prices have slumped more than 50 percent in the past year and companies from ConocoPhillips […]

Posted On : Published By : Tom Whipple
Category:

Mexico Sets Minimum Payments for Next Offshore Oil Field Auction

Mexico will require royalty payments of 30 to 36 percent for companies that win rights to produce oil in the nine shallow-water fields up for auction this month, the country’s finance ministry said. Companies that win production sharing contracts to drill in the Gulf of Mexico will have to pay a rate that varies depending on the obligation of each field, according to the e-mailed statement. Mexico won’t require companies to pay an additional royalty for the investment that goes into production and development of each field, known as the work program. The announcement of the minimum financial requirements prior to the awarding of the contracts is one of several adjustments made by the Mexican government to attract more bids than in July, when only two of 14 blocks were awarded to private companies. In the country’s first auction of oil blocks to private companies, Mexico announced the required […]

Posted On : Published By : Tom Whipple
Category:

Mexico Sweetens Terms for Coming Auction of Oil Fields

MEXICO CITY—Mexico sweetened the terms for its September auction of oil fields, setting minimum bids Monday that are generally lower than for the exploratory blocks offered in July, which generated little interest given the weak price environment for oil and gas. The Finance Ministry said the minimum bids for five groups of shallow-water fields guarantee a fair share of profits for the government while keeping the energy sector competitive for private capital. The ministry said the government’s overall take of the oil profits, after royalties and taxes, will be more than half. Industry analysts said the government is taking the right steps to make this month’s auction more successful than July’s. Oil regulators had already made some changes to the contract terms for the September auction to generate greater interest. “I think a very important thing to notice here is that the government is willing to show flexibility going […]

Posted On : Published By : Tom Whipple
Category:

Pemex 2016 Spending Budget Reduced as Woes Build After Reform

As Petroleos Mexicanos seeks investment from outside Mexico, it’s losing some support from the government. President Enrique Pena Nieto announced Tuesday that Mexico’s budget proposal would include 293 billion pesos ($17 billion) for Pemex investment in 2016, down from 366 billion pesos this year and the lowest amount allocated to the world’s ninth-largest crude producer since 2007. As the Mexican state-owned oil producer heads for an 11th straight year of production declines, it now faces a 20 percent cut in its budget for investments in oil fields next year. That puts further pressure on Pemex, which has lost money 11 quarters in a row, as foreign firms line up to bid for the right to drill in Mexican territory. With the goal of boosting supply, the company has no plans to pump less to support prices, Finance Minister Luis Videgaray said Tuesday. The reduction of the company’s investment, which […]

Posted On : Published By : Tom Whipple
Category:

Mexico Sweetens Oil Auction to Draw Firms Hit by Low Oil Prices

MEXICO CITY—Mexico’s hydrocarbons regulator has improved the terms for its September oil auction to drum up more interest among cash-strapped international oil firms reeling from falling prices, with industry analysts applauding the move Wednesday as a step in the right direction. The National Hydrocarbons Commission approved a series of changes in both auction procedures and contract terms that reduce the risk to oil companies seeking to begin operations in Mexico following the nation’s energy opening to private and foreign firms. The first oil block auction under the energy overhaul, held in July, was considered a failure because only two of 14 exploratory offshore blocks were awarded. Mexican officials promised to find ways to improve the terms for the second auction, which are for five groups of already discovered offshore fields. Some analysts said the government has at least partially delivered on its promise. “This is the kind of response […]

Posted On : Published By : Tom Whipple