LatinFinance - September/October 2017 - 28
MEXICO
OIL & GAS
As a swath of global energy companies take advantage of Mexico's
newly-opened oil & gas industry, finding the financing for new
commitments could be tough. By Tom Nelthorpe
Reforms in action
W
hen drillers at the Zama-1 well hit oil in July, they were not
the only ones celebrating. The oil strike - one of the 10 biggest offshore
discoveries in the past five years - was a win for the country and the
industry as a whole, underscoring the new dynamics in Mexico's oil
and gas industry.
Until a few years ago, private exploration was banned, but the reforms enacted by President Enrique Peña Nieto's administration in
2014 ended Pemex's monopoly on drilling for oil. The group drilling at
Block 7, some 50 kilometers off the coast of the state of Tabasco, was
the first private exploration company to do so offshore in Mexico.
Around the world, the industry took note of the find. Shares in London-listed Premier Oil, which owns 25% of the extraction consortium,
jumped 30% after the company confirmed the block has more than 1
billion barrels of oil. The other two members - Mexico City-based Sierra Oil & Gas with 40% and Texas' Talos Energy with 35% - are privately
held.
But the significance of the discovery does not end there. It extends to
Mexico's oil industry as a whole, with independent firms like Sierra and
major oil companies like Italy's Eni placing bets on Mexico's onshore
and offshore oil exploration blocks.
The argument for reform - at least in the upstream sector - was that
Pemex, which bulks up the government's finances with a heavy tax
burden, lacked the resources to fully develop Mexico's oil and gas reserves. Instead, it had concentrated on large fields like Cantarell, which
has been the backbone of production since the 1980s. "Pemex was not
able to focus on some promising discoveries because it was focused on
fields like Cantarell," says Laura Vila, a senior investment officer at the
International Finance Corporation (IFC) in Mexico City.
28 L ATINFINA NCE.COM - September/October 2017
LAURA VILA, IFC
"IT'S WELL
RECOGNIZED THAT
THE GOVERNMENT
HAS MADE ITS BEST
EFFORTS TO MAKE
THE BIDDING AS
COMPETITIVE AS
POSSIBLE, AND SEVEN
ROUNDS IN LESS
THAN FOUR YEARS
IS A PRETTY GOOD
START"
http://www.LATINFINANCE.COM
Table of Contents for the Digital Edition of LatinFinance - September/October 2017
Contents
LatinFinance - September/October 2017 - Cover1
LatinFinance - September/October 2017 - Cover2
LatinFinance - September/October 2017 - Contents
LatinFinance - September/October 2017 - 2
LatinFinance - September/October 2017 - 3
LatinFinance - September/October 2017 - 4
LatinFinance - September/October 2017 - 5
LatinFinance - September/October 2017 - 6
LatinFinance - September/October 2017 - 7
LatinFinance - September/October 2017 - 8
LatinFinance - September/October 2017 - 9
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LatinFinance - September/October 2017 - 11
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LatinFinance - September/October 2017 - 18
LatinFinance - September/October 2017 - 19
LatinFinance - September/October 2017 - 20
LatinFinance - September/October 2017 - 21
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LatinFinance - September/October 2017 - 23
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LatinFinance - September/October 2017 - 28
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LatinFinance - September/October 2017 - Cover3
LatinFinance - September/October 2017 - Cover4
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