CaboSur
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Crude harvest: selling Mexico's oil
Very interesting video regarding the opening up of Mexico's oil to foreign investors. The video seems very left wing to me, but draw your own opinion.
copy and paste the following link
http://www.aljazeera.com/programmes/specialseries/2014/12/cr...
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AKgringo
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What isn't clear to me from reading the Aljazeera article, is are foreign companies going to drill in Mexico, or is Pemex going to allow other nations
exclusive rights to some of the fields there are pumping.
Since the price of fuel in Mexico doesn't seem to be linked to the price of their crude, why would they want to sell any surplus at the lowest price
in years?
[Edited on 12-26-2014 by AKgringo]
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wilderone
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Bloomberg Dec. 10, 2014
Mexico authorized preliminary bidding rules for new offshore blocks as the country prepares for an investment deluge in its recently opened oil
industry.
Oil regulator CNH approved rules today for 14 shallow-water exploratory blocks that will be auctioned to private companies by the end of July,
according to a live feed of the meeting. In a separate vote, the agency also approved production-sharing contracts for the winners.
Setting the guidelines is the latest step in the country’s move to allow foreign companies to produce oil, ending a 76-year-old state monopoly. The
available blocks are expected to contain light crude and have low production costs that will not surpass $20 a barrel, said Juan Carlos Zepeda, head
of CNH.
“They are very attractive areas,” Zepeda said. “We’re expecting these areas will bring oil and hydrocarbons to Mexico in the relatively short term.”
Data rooms for the first blocks will be available by Jan. 15, according to CNH Commissioner Sergio Pimentel. Mexico will receive bids for the first
blocks by June and award contracts by July, two months behind the original May deadline set by the CNH.
Companies that win the blocks have up to five years to develop an exploration plan accompanied by a minimum investment, according to CNH Commissioner
Guillermo Cruz. Once a discovery is made, companies will have less than one year to determine if the find is commercially viable, he said.
Preliminary bids
Releasing preliminary bidding rules “allows for feedback to assure terms aren’t unrealistic or could sabotage a potential bid,” Tim Samples, a law
professor and Mexican energy analyst at the University of Georgia in Athens, said in a phone interview before the release.
“Knowing the pre-qualification criteria allows companies to move their negotiations one step further and seek out partners,” Ivan Cima, head of Latin
America upstream oil and gas research at Wood Mackenzie, said in a phone interview from Houston. “It all comes down to the returns that these
companies can generate on their investment, and those will be very closely dictated by the fiscal terms offered.”
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russchung
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This Christian Science Monitor article from 2013 gives a good overview of the issues.
http://www.csmonitor.com/World/Americas/2013/0813/Long-a-sta...
The basic problem is that ever since the Mexican government expropriated the oil companies in the 1930s, Pemex has been the only company allowed to
explore and drill for oil in Mexico. Pemex has been accused of being a bloated, inefficient monopoly and now finds itself unable to finance the
exploration, drilling and development of new oil fields. This article says that at the present rate of pumping, the existing Pemex wells will run dry
in 10 years.
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4x4abc
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exactly - the time when you could stick a pipe in the ground and pump are gone. It's facking and deep well stuff now.
Pemex doesn't have the expertise nor the money for the new technologies.
Unless they team up with knowledgeable partners, Mexico will be dry in a few years.
No left wing - no conspiracy.
Harald Pietschmann
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john68
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I paid $1.97/gallon for regular in Denver a few days ago.
I think Magna was around $4/gallon earlier this month.
Unless the peso is devalued by about 50% or more (it's happened many times before), the price of gasoline is bound to hurt Mexican in international
markets--esp. manufacturing and agriculture.
This is the nature of price controls.
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rts551
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Speaks for itself. But the government still very much controls PEMEX.
http://www.bloomberg.com/news/2014-12-27/mexico-withdraws-3-...
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4x4abc
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Freakonomics
Harald Pietschmann
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David K
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Quote: Originally posted by lencho  | | Quote: Originally posted by john68 | | Unless the peso is devalued by about 50% or more (it's happened many times before), the price of gasoline is bound to hurt Mexican in international
markets--esp. manufacturing and agriculture. |
Pardon my denseness, but I don't understand the relationship; how does that work?
 |
If Mexico doesn't stay competitive, just like any business, the customer will shop elsewhere. Either Mexico lowers the price of the gasoline OR
devalues the peso if they can't legally lower the price.
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Sweetwater
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| Quote: Originally posted by john68 | I paid $1.97/gallon for regular in Denver a few days ago.
I think Magna was around $4/gallon earlier this month.
Unless the peso is devalued by about 50% or more (it's happened many times before), the price of gasoline is bound to hurt Mexican in international
markets--esp. manufacturing and agriculture.
This is the nature of price controls.
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That devaluation is happening now: USD-MXN 14.7158 -0.0162 -0.11%
Remember the 12 range that seemed so stable when Oil was $100? Unlike the Russian ruble, the devaluation of the peso is happening more slowly since
there isn't international pressure to collapse the Mexican economy. The 50% devaluation is being cushioned to avoid that economic shock. I'd bet the
Russians would prefer that to their current onslaught.....
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CaboSur
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| Quote: Originally posted by soulpatch | The videos in that story are well worth watching. There are no easy answers.
And Nafta..... screwed workers on both sides of the border. |
Toward the end of the video shows the security provided to the drillers who came over from Texas in 2012. The drillers paid the security company for
protection while drilling. Gee, is anyone fooled by who this private security company is owned by ? One guess, the drug cartels!
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Bajahowodd
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The recent decline in crude oil prices may have thrown a monkey wrench into this venture. The major international oil companies are cutting back on
drilling projects.
On one hand, if the Mexican reserves can be tapped, it would likely allow North America to become energy independent.
That said, the Keystone pipeline has nothing to do with independence, but rather a way to shipp crude to the Texas gulf to be refined and sold
overseas.
So, the real problem is that virtually all the big oil companies are multi-national and look to maximize their profits with regard to no particular
country.
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