Delaying Mexico’s 2018 Bidding Rounds is a Smart Move by CNH

Following the news (Wednesday 18th July 2018) that Mexico’s hydrocarbons agency re-scheduled bidding rounds 3.2, 3.3, and onshore farm-out round for February 2019, which was originally planned for the second half of 2018,

Adrian Lara, Senior Oil and Gas Analyst at GlobalData, a leading data and analytics company, offers his view on the impact on the upstream sector:

“With this move, National Hydrocarbons Commission (CNH) allows time for more reassuring signals from the current transition team to be sent to private and foreign investors. This should counter the business unfriendly fears created during the campaign. By delaying the rounds the agency is playing within its institutional space to secure continuity in the bidding without directly contradicting the new president’s message of reviewing upstream contracts.

“The uncertainty generated by the 2018 electoral campaign negatively impacted the interest in these three rounds. In particular for Round 3.2, there should have been more interested companies since these areas are quite similar to the successful round 2.3, but with almost three times more blocks. The farm-out round is quite important for Pemex and to date it only had six interested companies.

“During the last three years CNH has been quite successful in adapting its scheduled rounds to make them more attractive and increase their chances of success. The agency has been highly transparent and has incorporated industry and government feedback in an effective and autonomous manner. By delaying these 2018 rounds, it allows more time to attract other companies to participate and it lets the next administration play their role if they want to review and provide feedback on the contract’s terms.”

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