Mexico Plans Auction of Deep-Water Exploration Blocks amid Growing Water Management Requirements in Oil and Gas Industry

Published Date : Dec 16, 2015

With increasing scarcity of water, water management in oil and gas industry has become crucial. The global water management market for oil and gas industry is expected to grow considerably with emergence of wide-scale development of shale resources for oil and gas production. Multi-stage fracturing has further propelled the demand for recycling and treatment of water across various stages in oil and gas production such as drilling of exploration well, injection into the well, and refining and oil processing. It is becoming increasingly difficult for operators to get hold of deep-water exploration blocks. In such times, Mexico’s Energy Ministry’s plan to auction deep-water exploration blocks in the Gulf of Mexico has brought relief to the oil and gas operators in the country.

This week, Mexico has already successfully auctioned 25 onshore blocks with medium oil and gas resources. This has been the fourth oil auction by the Mexican government since 2013 when new rules opened up the oil and gas industry to private and foreign companies. The highly anticipated tender of deep-water exploration blocks has left the industry speculating. The auction of 25 onshore contracts by the National Hydrocarbons Commission, the oil regulator in Mexico, has put favourable terms for the government. These mature fields have residual quantities of oil and gas from earlier production and need new investments from foreign and local firms. 

As government officials are promising the details on the deep-water auction for the past several weeks, the local industry players are teaming up with experienced foreign partners to acquire higher technical requirements. A U.S. and a Canadian company have won bids in the recent auctions. Industry analysts have pointed out that though the auctions have proved fruitful for the government, the companies might have overpaid for bidding.