Steve Otillar Talks Mexico Oil Auction with Law360
For its article “Mexico Oil Reformers Get Reality Check From Auction Results,” Law360 interviewed Akin Gump oil and gas partner Steve Otillar on what the article characterized as the disappointing results of Mexico’s historic oil auction this week, when only two of 14 shallow-water oil blocks in the Gulf of Mexico up for auction were awarded.
Otillar pointed to market conditions and the legal and financial obligations that Mexico is imposing as factors: “You can't understate the impact of the price of oil, because everyone's exploration budget is being slashed globally. Mexico is going to have to be more attractive from a legal and fiscal standpoint than other regimes to entice operators to enter a new country.”
He noted that the upcoming auction round in September, which will feature producing blocks, may be more successful compared to this round, which featured exploratory blocks, saying, “There is a producing, mature field and there's a lot more infrastructure in place. I think you'll see a significantly higher level of participation. I think there will be a lot of reaching out to industry and officials trying to do what they can to promote involvement.”
Otillar pointed to next year’s auction of deepwater offshore blocks as a deadline for Mexico to iron out any issues: “Each one of these rounds coming up are all a precursor to the ultra-deepwater auction round, which is going to be significantly larger and has to be done right. You're talking about not tens of millions, but billions, of dollars in investment.”