Akin Gump Lawyers Talk Mexico’s Deep-Water Oil Auction
In the interview “Was Mexico’s First-Ever Deep-Water Tender a Success?” Akin Gump oil & gas partner Steven Otillar and associate Eduardo Canales discuss Mexico’s inaugural deep-water oil auction, which was held on December 5, with Latin America Energy Advisor.
Among the topics covered, Otillar and Canales discussed the following:
The successful outcome of the auction – “Ultimately, eight out of 10 deep-water licenses were awarded to prominent companies like ExxonMobil, Pemex and Chevron, which are expected to have an associated investment effect of almost $35 billion over the next 35 years. In addition to Round 1.4, the first ‘farm-out’ contract was awarded to BHP Billiton, who will partner with Pemex to explore and develop the Trion deep-water field, one of Pemex’s most promising assets.”
The advantages gained from the auction – “[O]n one hand, the Mexican energy industry will benefit from the competition, innovation, diversification, employment, talent development and capital infusion required for these highly complex offshore projects, while on the other hand, the energy industry broke recent market trends and acquired long-term assets expected to have a concrete impact on their reserve-replacement ratios.”
The next steps for the country – “Looking ahead, it is critical for Mexico to use this success as a stepping stone to address key challenges that could fundamentally jeopardize the evolution of its energy industry and its conclusive integration into the international energy stage … the focus will need to turn more granular—focusing on the other governmental agencies and industry regulations and standards—to further incentivize investment and facilitate the sustainable development of natural resources, while balancing the need for health, safety and environmental protection.”