July 14, 2017

PITY THE POOR MALTHUSIANS:

Billion-Barrel Mexico Find Could Spur Rush on Next Oil Auctions (Adam Williams, Amy Stillman, and Giacomo Tognini, 7/13/17, Bloomberg)

A billion-barrel crude discovery in Mexico could be just the lure the country needs to boost investment from oil majors as it lacks the wherewithal to reverse years of sagging output.

At a time when global oil prices were cratering, and drillers were nervously cutting exploration funds, Mexico's earliest auctions drew spotty interest. Since then, however, European drillers led by Italy's Eni SpA have increasingly become involved. The find in Mexico's shallow waters could drive added interest -- and higher bids -- in future auctions as the government seeks to boost production that's fallen by a third in the past decade.

On Wednesday, Premier Oil Plc, Sierra Oil & Gas and Talos Energy LLC announced the first Mexican discovery by explorers other than state-owned Pemex in 80 years, a reservoir with an estimated 1.4 billion to 2 billion barrels. With new auctions set for the end of the year, the find promises to rev up interest in Mexico's energy riches moving forward, said Pablo Medina, an analyst at the consulting firm Wood Mackenzie Ltd.

"Future bids will likely be more aggressive," Medina said in a telephone interview. "This obviously increases the attention people will pay. The area contiguous to this block is going to go up in value, no question." [...]


The find has "de-risked a little bit some of these shallow-water opportunities" in Mexico as it confirms that other explorers have the potential to find assets that Pemex either overlooked or couldn't develop, said Jeremy Martin, vice president of energy and sustainability at the Institute of the Americas, speaking over the phone from La Jolla, California.



Posted by at July 14, 2017 9:26 AM

  

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