With an eye on the prolific deep-water hydrocarbon blocks to be put on offer in Mexico, state-run ONGC Videsh (OVL) may partner with foreign exploration giants to bid for them.
The South American nation has opened up its acreages for foreign companies to explore hydrocarbons after a more than 75-year hiatus. In July, President Enrique Pena Nieto’s government offered two of 14 shallow-water blocks on offer at the maiden auction.
“Mexico is a focus country for us. It has resources and it has opened up. We are looking forward to their deepwater bid round. We may also partner with some foreign explorer for the deep-water blocks in Mexico,” Sudhir Sharma, director (exploration) of ONGC Videsh, told FE.
Sharma, who took charge as director on August 1, expects Mexico to put the deepwater blocks on auction by the end of September. Nearly 34 companies evinced interest for the first set of 14 shallow-water production-sharing contracts. These include ExxonMobil, Statoil, Hunt Overseas, Murphy Worldwide and Petronas, among others.
OVL had pre-qualified in the shallow-water bid round, Tender 1, which had 14 blocks on offer, and also Tender 2, where nine fields are on offer. OVL did not get any blocks in Tender 1, while the second tender is still under process.
In the first tender, only two firms — Mexico’s Sierra Oil & Gas, in a consortium with Houston-based Talos Energy, and the UK’s Premier Oil — bagged blocks. They offered to pay the government 55.99% of the operating profit from a first block and 68.99% from a second, in both cases offering to invest 10% above the minimum requirement.
“The shallow-water blocks are offered through the revenue-sharing model. And we expect the deepwater blocks should also come with the regime of revenue sharing,” Sharma added. With Prime Minister Narendra Modi wanting India’s crude oil imports, which stood at 189.43 million tonnes (MT) worth $112.74 billion in FY15, to be reduced by 10% by 2022 and make it half by 2030, OVL would have to play a pivotal role by acquiring prolific assets.
Giving an impetus to oil diplomacy, petroleum minister Dharmendra Pradhan led an Indian delegation to Mexico in May. During his two-day official visit, he held bilateral talks with his counterpart, Mexico’s minister of energy Pedro Joaquín Caldwell.