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Mexico president says no more Pemex oil joint ventures for now

Mexico president says no more Pemex oil joint ventures for now© Reuters. The Pemex logo is pictured during the 80th anniversary of the expropriation of Mexico’s oil industry at the headquarters of state-owned oil giant in Mexico City

MEXICO CITY (Reuters) – President Andres Manuel Lopez Obrador said on Thursday Mexico will not offer more oil joint ventures between private companies and state energy company Pemex indefinitely, raising doubts about auctions set for October.

In reply to a question about the contracts, known in the industry as “farm-outs,” Lopez Obrador said the country would not offer more until existing projects began producing oil.

Credit ratings agency Fitch downgraded Pemex in January, citing precarious finances and a collapse in oil output.

Lopez Obrador is betting on raising oil production through service contracts mainly with Mexican companies to squeeze more oil from existing shallow water and onshore fields.

He has long been a critic of his predecessor’s liberalization of the energy industry, which allowed private and foreign companies to bid for oil exploration and production both alone and in association with Pemex.

Lopez Obrador, who is from oil-producing state Tabasco, has previously said he will give companies three years to start producing before he decides whether to allow more auctions. He has not been clear whether this also applies to Pemex joint ventures.

In December, a few days after Lopez Obrador took office, the National Hydrocarbons Commission canceled two auctions for private energy companies set for February. But it chose to delay until Oct. 9 rather than cancel a round of “farm-out” auctions.

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Source: Investing.com

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