By Ana Isabel Martinez, Adriana Barrera and Stefanie Eschenbacher
MEXICO CITY, Dec 16 (Reuters) – Mexican state oil company Pemex has awarded five of the 11 new joint venture contracts it had planned to ink before the end of the year, according to four sources familiar with the matter and a document seen by Reuters.
But Pemex was unable to attract major companies, and the production the ventures may add looks too small to significantly help reverse Mexico’s declining crude oil output. Pemex has been trying to persuade reluctant investors to join a total of 21 new joint venture contracts that could add up to 450,000 barrels per day of crude oil, or a quarter of its forecast output by 2033.
“So far it hasn’t been successful at all, as anticipated,” said one source, adding that the contract model has not attracted the big players. “The production from those projects isn’t going to make a difference for Pemex.”
Known as mixed contracts, they are due to be signed on December 19 and would be the first of their kind in Mexico.
STATUS OF 6 OTHER CONTRACTS UNCLEAR
Bearing logos of the Mexican government and Pemex, the undated document lists the companies that bid for the contracts and the winners for each of the following onshore projects: Tupilco Terciario; Sini-Caparroso; Cuervito; Agua Fria; and Tamaulipas Constituciones.
The four sources confirmed the document’s authenticity.
The document did not say what had happened with the other six contracts that Pemex had previously said it expected to secure.
Pemex declined to comment on the matter. It said earlier it expected the 11 contracts to add almost 70,000 bpd this year.
Pemex’s partners in the first five contracts would be primarily local companies, the document showed, and the state company would have stakes of between 40% and 85%.
Details of the contracts, including the values and Pemex’s participation, have not been previously reported.
Consorcio Petrolero 5M del Golfo won two contracts in the bidding process while Geolis, Petrolera Miahuapan and Cesigsa won one each, the document showed. Pemex would receive a total of $50 million from these companies as a signing bonus.
Reuters was unable to find a website for Consorcio Petrolero 5M del Golfo and a message sent on LinkedIn to the company was unanswered. Geolis, Petrolera Miahuapan and Cesigsa did not respond to requests for comment.
It was unclear what services each of the companies would provide, but at the core of the contract model is the idea that the companies develop fields together with Pemex.
Under the laws governing the new contract model, Pemex would usually be responsible for commercializing the hydrocarbon products.
PEMEX PRODUCTION FALLS
In recent years, the heavily indebted company has struggled to maintain its production of 1.6 million bpd of crude oil and condensate, a steep fall from the 3.4 million bpd it produced two decades ago.
Mexican President Claudia Sheinbaum has said she expects national production, which Pemex dominates, to reach 1.8 million bpd during her term that ends in 2030.
Pemex could try to award other contracts this week, said one of the sources, who, like others, spoke on the condition of anonymity because the information is not public.
The modest results are a stark contrast to the strong interest from some of the world’s largest oil companies that Mexico’s exploration and production projects drew during the government of former President Enrique Pena Nieto.
Reuters recently reported how Pemex’s heavy debt burden and some conditions attached to the contract model could be an obstacle to achieving production goals.
Even so, Pemex has said the conditions were important for it and the revenue it contributes to state coffers.
“This contribution is relevant both to stabilize base production and to compensate for the decline of mature fields and ensure compliance with the country’s energy supply commitments,” states the strategic plan for Pemex, presented in August.
(Reporting by Ana Isabel Martínez, Adriana Barrera and Stefanie Eschenbacher, editing by Stephen Eisenhammer and Rod Nickel)
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