Tuesday, March 15, 2011

Oil Contracts Up for Bidding

The announcement that Pemex would begin taking bids on service contracts a few weeks ago came and went without much fanfare, but the success of this provision will go a long way to determining if the oil reform was utterly worthless or just falls way, way short of what was needed. Here's more:
State oil company Pemex announced on Tuesday the first "integrated" exploration and production contracts, which allow greater private involvement in the tightly controlled sector.

Petroleos Mexicanos is offering six fields in three areas that produced lots of oil in the 1960s but have been largely ignored since then.

The company said the fields in the Gulf coast state of Tabasco currently produce about 13,000 barrels per day but could yield as much as 50,000 with the right technology.

They have probable reserves of about 200 million barrels of crude equivalent, according to the company.

So-called integrated contracts — under which companies take responsibility for a broad range of services and are paid at least in part based on performance — were approved in October 2008 after a heated debate and protests by Mexicans worried about ceding control over an important symbol of national sovereignty.

Mexico has used private contractors for decades, but financial arrangements have largely been restricted to fixed payments for a given service.
Excélsior reported that Spain's Repsol, Carlos Slim's Grupo Carso, Argentina's Tecpetrol, and Colombia's PetroSantander are among the interested groups, though who knows how deep their interest is. (Yes, I did sort of suggest that Carlos Slim is equal to a country in the previous sentence.)


Anonymous said...

I am so sure that Mexico is on the path to another Shock Doctrine moment. This is such a bad idea.

pc said...

Can't say I share that worry. This isn't a radical piece of free-market craziness. Mexico has one of the most closed off oil industries in the entire world, and arrangements like this one are commonplace in the industry. The danger for Mexico is that it is so reliant on revenue (something like a third of the federal budget) from an industry whose revenues are going to be declining without exploiting new fields, which means involving companies, be they public or private, with more technological capability and funds to invest than Pemex has. It also, of course, implies that the govt should wean itself off of oil revenues. Shock doctrine, at least as I understand it (which I grant you may be a bit off), has very little to do with it.