Exxon, Hunt among companies approved to bid on drilling in Gulf of Mexico

“Shell, the European oil giant, and Brazil’s national oil company Petrobras, both of which had initially explored pursuing drilling rights in Mexico, ultimately decided to pull their applications…”

By JAMES OSBORNE: Staff Writer: Published: 26 May 2015 

Exxon Mobil and Hunt Oil aren’t turning their backs on Mexico’s oil fields yet.

The North Texas-based oil companies were among 26 entities approved to bid on drilling rights in the shallow-water Gulf of Mexico off Veracruz, the Mexican government announced Monday.

Mexican President Enrique Peña Nieto announced in 2013 that the country was opening its oil and natural gas fields to foreign companies for the first time in almost 80 years to try to revive lagging production. But enthusiasm has waned since last summer, as low crude prices threaten drilling projects worldwide.

Shell, the European oil giant, and Brazil’s national oil company Petrobras, both of which had initially explored pursuing drilling rights in Mexico, ultimately decided to pull their applications, Juan Carlos Zepeda, head of Mexico’s National Hydrocarbons Commission, said Monday.

The oil leases off Veracruz go up for auction July 15, representing the first public test of the appetite for Mexico’s oil reserves. George Baker, an analyst who publishes the journal Mexico Energy Intelligence, said that despite the long list of pre-approved companies, he didn’t expect many to bid next month.

“I expect no bids from the larger companies and some bids from the smaller companies,” he said. “It’s not worth the time of big companies to go after small targets. The big oil companies need elephants to justify their overhead. That’s not what’s being offered.”

Other U.S. companies on the government’s list include Chevron, Hess and Marathon Oil.

The Mexican government forecasts that by 2018 the energy reforms will drive $50 billion in foreign investment and a 500,000-barrel-a-day increase in production. That would be a significant gain for a country that in February reported daily oil production averaging 2.3 million barrels a day, down 10 percent since 2010.

“Mexico has a significant natural resource. And I think 10, 15, 20 years from now you’re going to see huge changes along the border,” Ray L. Hunt, CEO of Hunt Consolidated, said in an interview last year.

Follow James Osborne on Twitter at @osborneja.

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