This past week the government of Mexico stepped out of its comfort zone and offered by auction 14 of its oil exploration fields. Perhaps low oil prices kept heavy hitters from bidding. Mexico sold only two oil fields. Others conjecture that bidders did not want to pay the government’s minimum prices.
In spite of decades of poor performance, the government’s oil company, known as Pemex, has survived. In recent years, Pemex, however, has been brought to its knees by falling prices and thefts by drug cartels.
The two parcels sold in the auction went to Sierra Oil and Gas, a Mexican owned-company. They purchased two shallow water fields. Bidders were promised a 30-year contract. Those who registered but did not bid, included ExxonMobil, Chevron, Statoil from Norway, and ONGC Videsh Limited from India.
This is just the first step in the auctioning plans for Mexico’s oil and mineral resources. More than 169 fields are available and are expected to be auctioned over the next several years.