Mexico expects $8 billion from offshore oil and gas auction

March 28 (UPI) — Mexico’s government estimates more than $8 billion will be invested over the lifetime of oil and gas contracts awarded in shallow waters in the Gulf of Mexico.

The government said it awarded 16 contracts to 14 companies grouped into 12 bidders during its latest auction for offshore contracts. The total investment over the lifetime of the contracts could be as high as $8.6 billion.

“The results confirm the interest of high capacity and international prestige companies to invest in Mexico, which strengthens and makes the hydrocarbons sector more competitive,” the country’s energy department stated.

British explorer Premiere Oil was among the big winners, taking three blocks in the auction. A survey to get a better understanding of the reserve potential is scheduled for next year, with drilling commitments set for 2020.

An auction in February brought in about $93 billion in investments over the lifetime of the contracts, extending over the next 35 years, one of Mexico’s most successful auctions to date.

In a new era where oil prices are close to $70 per barrel, 19 of the 29 contracts on the auction block were awarded last month, with supermajor Royal Dutch Shell taking the lead in the tenders.

Mexico aims to produce around 3.5 million barrels per day by 2025. Production there has been on the decline and the 2025 goal would represent an increase of more than 1 million bpd based on a recent average.

Energy sector reforms enacted by Mexican President Enrique Peña Nieto could bring in up to $415 billion in investments over the next 20 years as the country establishes links to the rest of the world.

Peña Nieto’s six-year term ends next year and Mexico is readying for presidential elections in July, coming at a time when the country is working to set a firmer economic foundation as uncertainty brews over the fate of the North American Free Trade Agreement.