Pemex tie-ups to proceed despite president's critical statement

MEXICO CITY: Auctions scheduled later this year to pick joint venture partners for Mexican state oil company Pemex will proceed, an official at the national oil regulator said on Thursday, despite the president's apparent cancellation of the tie-ups.

An official with the National Hydrocarbons Commission (CNH), the regulator that runs the auctions, said the joint venture auctions have not been canceled.

"They're still going forward," said Martin Alvarez, head of the regulator's exploration contracts unit, on the sidelines of an energy forum in Mexico City.

President Andres Manuel Lopez Obrador has scrapped two separate oil auctions involving mostly natural gas and shale projects, breaking sharply with his predecessor who pushed the tenders to try to reverse a long slide in output.

Last week, Lopez Obrador appeared to suggest that his government will not offer private oil companies more opportunities to partner with Pemex until existing projects begin to show results. Three have been signed to date.

"When they begin to produce, we will review the possibility of continuing with these contracts, but right now they're not producing," said Lopez Obrador at a Feb. 21 press conference.

While Pemex's flagship Trion deepwater project with partner BHP Billiton has yet to enter commercial production, two others - covering the onshore Cardenas-Mora and Ogarrio fields - are producing relatively small amounts of oil and gas.

The October auction covers seven onshore contracts which envision that Pemex's prospective partners would operate the projects instead of the state-owned producer.

The CNH webpage notes that 11 companies, including China Offshore Oil Corporation and Germany's Deutsche Erdoel, have begun the process of pre-qualifying for the auctions.

Officials with Pemex and the energy ministry did not immediately respond to a request for comment.

At the same Feb. 21 press conference, Pemex CEO Octavio Romero also appeared to dismiss the auctions for the joint ventures, also known as farm-outs, scheduled to be awarded on Oct. 9.

"What has already been agreed to will stay on track. (The Pemex joint ventures) don't exactly follow the logic we are pursuing right now," said Romero.

He added that the government's focus is on service contracts aimed at helping Pemex quickly develop 20 oil and gas projects clustered around the southern rim of the Gulf of Mexico.

Those projects would not give contractors the opportunity to take an equity state in them.