Mexico sees beginning of development of the domestic industry

Mexican government implemented third auction of first round of energy reform yesterday, by tendering 25 onshore oil and gas fields licenses. 40 companies out of the pre qualified 51 participated in the auction.

Royalty paid in % of total earnings was the main bidding variable. These areas have total 3P reserves of 30 mn barrels of oil and 187.8 mn of mpce of gas.

Allocation was done for all contracting. This might be the most successful auction of oil fields in world records as it had 100% rate of allocation.

"This is the beginning of the development of the domestic industry. From the winning companies, only two were foreign (Canada) while the rest are Mexican. This suggests that an important number of Mexican firms and consortiums should obtain the experience to further develop a domestic private oil and gas industry", says Barclays in a research note.