CNOOC buys two blocks in oil auc­tion

En­ergy re­form in Mex­ico opens mar­ket for first time in the na­tion for al­most 80 years

China Daily (Hong Kong) - - BUSINESS - By ZHENG XIN zhengxin@chi­

CNOOC, China’s largest off­shore oil and nat­u­ral gas pro­ducer, has strength­ened its in­vest­ment in Mex­ico’s en­ergy sec­tor by buy­ing two deep­wa­ter oil blocks at auc­tion.

China Na­tional Off­shore Oil Corp has won two of the 10 blocks on of­fer, one of them just 6.5 kilo­me­ters from the mar­itime border with the US, with bids that far out­stripped the min­i­mum re­quired, ac­cord­ing to the State-owned com­pany.

The first of­fer was nearly six times the min­i­mum re­quired, and the sec­ond was al­most as high, the com­pany said.

The deep­wa­ter oil blocks are con­sid­ered a “jewel in the crown” by the Mex­i­can gov­ern­ment. The auc­tion was part of the coun­try’s en­ergy re­form that is open­ing a sec­tor that has been closed to pri­vate ex­plo­ration and pro­duc­tion for nearly 80 years.

Ac­cord­ing to Li Li, en­ergy re­search direc­tor with ICIS China, Mex­ico’s en­ergy open­ing, which is meant to re­vi­tal­ize the coun­try’s oil and gas in­dus­try, is good news for Chi­nese com­pa­nies, as the coun­try is listed as the 12th largest oil pro­ducer with rich oil and gas re­sources.

“Mex­ico’s plan to ten­der deep­wa­ter ex­plo­ration blocks in the Gulf of Mex­ico, open to for­eign and pri­vate com­pa­nies, is a good out­come for the coun­try, given the low-price en­vi­ron­ment for oil and gas,” said Li.

“It will fur­ther help Mex­ico open up its en­ergy sec­tors. And, for­eign com­pa­nies, in­clud­ing the Chi­nese Sta­te­owned com­pa­nies like CNOOC, will have more devel­op­ment op­por­tu­ni­ties and a more com­pre­hen­sive strate­gic lay­out in South Amer­ica through the bid­ding.”

CNOOC and other par­tic­i­pants have rich ex­pe­ri­ence in off­shore oil ex­ploita­tion, which will help Mex­ico bet­ter drill for the coun­try’s rich deep sea re­sources, she said.

Ac­cord­ing to the Mex­i­can gov­ern­ment, four of the 10 deep­wa­ter blocks be­ing auc­tioned are lo­cated in the Per­dido Fold belt, near the US side of the Gulf. Six are in the un­ex­plored Salina basin fur­ther south.

Pe­dro Joaquin Cold­well, Mex­ico’s en­ergy sec­re­tary, said the Mex­i­can gov­ern­ment is de­lighted that China came to com­pete and win, say­ing the move helps boost the two na­tions’ eco­nomic ties.

If this con­trib­utes to open­ing a new chap­ter in Si­noMex­i­can re­la­tions, that will be some­thing else good to have come out of the en­ergy re­form, he said.

Mex­ico abruptly an­nulled a $3.6 bil­lion high-speed rail con­tract won by a con­sor­tium led by China Rail­way Con­struc­tion Cor­po­ra­tion in 2014, which strained bi­lat­eral re­la­tions.

Dun­can Wood, head of the Mex­ico In­sti­tute at the Wil­son Cen­ter in Wash­ing­ton said in an in­ter­view with The Fi­nan­cial Times that this is a sign that Chi­nese firms re­ally want to get in­volved here, de­spite China not yet be­ing a ma­jor player in Mex­ico up to now.

In ad­di­tion to CNOOC, a con­sor­tium made up of Nor­way’s Sta­toil, BP and To­tal of France also won two con­tracts. Mex­i­can oil com­pany Sierra was part of con­sor­tiums that won two other li­censes and a Chevron-led bid scooped an­other.

To­tal and ExxonMo­bil of the US also won one bid. Shell failed to win the only block it bid for.

For­eign com­pa­nies ... will have a more com­pre­hen­sive strate­gic lay­out in South Amer­ica through the bid­ding ...” Li Li, en­ergy re­search direc­tor with ICIS China num­ber of oil blocks on of­fer by Mex­ico

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