“Mexico Oil Privatization Pays Off With Billion-Barrel Find”

[endicom]

Watts Up With That
David Middleton
July 12, 2017


    Mexico Oil Privatization Pays Off With Billion-Barrel Find

    By Adam Williams and Angelina Rascouet
    July 12, 2017

        Block among first awarded for private exploration in Mexico
        Premier Oil shares jump as much as 38% on Zama-1 well success


https://wattsupwiththat.com/2017/07/12/mexico-oil-privatization-pays-off-with-billion-barrel-find/


@thackney

[Joe Wooten]

A re-nationalization will occur in 3, 2, 1.............

[thackney]

A re-nationalization will occur in 3, 2, 1.............

I don't think so.  Many realize the most income possible for Mexico comes from the payments from a productive oil production, and PEMEX has long proven they are not the most productive.

[thackney]

Premier Oil's shares rocketed as much as 38 percent on Wednesday on news it discovered potentially more than 1 billion barrels of oil off the coast of Mexico, a major victory for Latin America's No. 2 economy since the historic opening of its energy sector.

Premier, which holds a 25 percent interest in the block alongside Talos Energy and Sierra Oil and Gas, said estimates for the Zama-1 well were in excess of 1 billion barrels, which could extend into a neighboring block.

http://www.reuters.com/article/us-premier-oil-discovery-mexico-idUSKBN19X0M2

[Wingnut]

A re-nationalization will occur in 3, 2, 1.............

That was what came to my mind also.

[endicom]

http://www.reuters.com/article/us-premier-oil-discovery-mexico-idUSKBN19X0M2

Then two billion-barrel finds. Good for the future.

[Joe Wooten]

I don't think so.  Many realize the most income possible for Mexico comes from the payments from a productive oil production, and PEMEX has long proven they are not the most productive.

Hopefully it won't, but wealth like that is a very tempting target for the notoriously corrupt socialist politicians of the PRI. Especially if it is partially owned by those hated yanquis......

[thackney]

Hopefully it won't, but wealth like that is a very tempting target for the notoriously corrupt socialist politicians of the PRI. Especially if it is partially owned by those hated yanquis......

Part of my thinking is because PEMEX timing was terrible for that initial round of bids.  Oil price had fallen low.  Not as many bids on not as many blocks as they had originally planned.  If nothing else, there is too much money yet to be made first getting more private investment, especially now that there has been some success.  That would drive more outside money.

If you are going to kill the golden goose, wait until you get more than just one egg.

[GtHawk]

I wonder if all the Gaia worshippers will go to Mexico to protest against off shore drilling there. Might be amusing.

[thackney]

CEO Says Mexico Oil Find Is 'Multiples Of What We Thought'
https://www.forbes.com/sites/christopherhelman/2017/07/13/ceo-says-mexico-oil-find-is-multiples-of-what-we-thought/#3c98dd3d3a77

...Sitting under just 550 feet of water (one tenth the depth of recent deepwater discoveries on the U.S. side), Zama will be relatively cheap to develop, and highly profitable even at $45 oil. “It’s too big and too shallow to be concerned about the economics,” says Duncan, 44. Oil consultancy WoodMackenzie says Zama is one of the 20 biggest new fields discovered in the past 2 decades.

Duncan won’t speculate on eventual production volumes, but fields of this size commonly produce in excess of 100,000 barrels per day. After the consortium recoups development costs, Mexico will receive royalties and taxes totalling about 80% of all oil and gas produced — to be worth more than $1 billion a year. Premier Oil says they expect commercial production from Zama in about 5 years....

...before Zama can be produced they will need to build a lot more infrastructure like subsea pipelines and a production platform. Pulling it all together will take several years.

Even though Mexico plans additional rounds of leasing, Duncan says the window of opportunity to get a good deal in Mexico is likely over — a United Nations of bidders descended on Mexico’s most recent shallow water auction last month....

[thackney]

Mexico Delays Next Oil Auction to Let Huge New Find Sink In
http://www.rigzone.com/news/oil_gas/a/151038/Mexico_Delays_Next_Oil_Auction_to_Let_Huge_New_Find_Sink_In
July 17, 2017

Mexico will delay its next offshore oilfield auctions by a month, giving international bidders more time to evaluate recent major crude discoveries that highlight the potential value of the assets.

A new billion-barrel find announced last week "confirms that the Mexican side of the Gulf of Mexico is very prolific," said Juan Carlos Zepeda, Mexico’s chief oil regulator in an interview Friday. "International and national interest is awakening."

July 12 marked perhaps the single most successful day for the Mexico oil industry since the government ended Petroleos Mexicanos’s government-owned production monopoly in 2014. Premier Oil Plc, Sierra Oil & Gas and Talos Energy LLC reported a reservoir with an estimated 1.4 billion to 2 billion barrels of oil in the southern Gulf of Mexico.

On the same day, Italian producer Eni Spa said its March find in Mexico’s offshore waters also contains the equivalent of as much as 1 billion barrels, and Mexico successfully auctioned 21 of 24 onshore fields to private companies.

"There was already interest to come, explore and work in the Gulf of Mexico before these finds, but now to have discoveries in such a short time, interest of international entrants to have activity in Mexico has renewed," Zepeda, head of the National Hydrocarbons Commission that oversees the industry, said in an interview in Bloomberg’s Mexico City office....

[IsailedawayfromFR]

I don't think so.  Many realize the most income possible for Mexico comes from the payments from a productive oil production, and PEMEX has long proven they are not the most productive.

Mexico resisted privatization as long as Cantarell field was the behemoth of its oil industry, and supplied a large % of its production. Cantarell's decline from over 2 million bopd in 2003 (which was second only to the world's largest Ghawar in SA) to now 400,000 bopd is responsible for most of the decline in Mexico.

Should another giant be found, one can be confident that Mexico will fashion things to take the bulk of the revenues from whatever private company is licensed to produce it.  It will be a nationalization of not the entire field, but of most of it by lessening of the private take.