Mexico City – Mexican state oil monopoly Petroleos Mexicanos has awarded incentive-based contracts to two private energy firms, allowing them to participate in crude drilling but not giving them any rights to the extracted oil.
The contracts, awarded Thursday, are the product of a controversial 2008 energy overhaul that was passed after seven months of contentious negotiations in which leftist lower-house lawmakers erected barricades around the speaker's podium for several days.
Private firms already participate in numerous oil-related activities in Mexico - including pipelines, transportation, offshore platforms and exploration - but they had not been involved in crude drilling since the country's oil industry was nationalized in the 1930s.
The new incentive-based contracts allow Pemex to hire private firms to carry out crude drilling and provide for additional cash payments if their results exceed an established baseline.
Firms also can receive extra payments for incorporating cutting-edge technology, exceeding efficiency targets or achieving lower-than-stipulated production costs, among other factors.
One of the tender winners was British firm Petrofac, which will develop crude reserves at mature fields in two areas of the southeastern Gulf coast state of Tabasco and charge Pemex $5.01 per barrel extracted.
The other was Mexico's Administradora en Proyectos de Campos, which will develop fields in another Tabasco area and charge $5.03 per barrel.
Pemex's profit margin in these arrangements is high, considering that Mexico's petroleum mix was valued at $99.32 a barrel on Thursday.
The total surface area of the three awarded production zones is 312 sq. kilometers (120 sq. miles) and they contain a total of 207 million barrels of oil equivalent. Current output at the fields is roughly 14,000 barrels per day.
But unlike in other countries where private companies develop the reserves and then sell the oil on international markets, Pemex will retain full rights to the extracted crude and all the benefits of marketing the product.
Created after President Lazaro Cardenas nationalized Mexico's oil industry in 1938, Pemex - the world's third-largest crude producer- accounts for roughly 30 percent of government revenues.
Oil also is a symbol of national identity and Mexican presidents vow every year at the oil-nationalization anniversary ceremony that the country's subsoil resources will never be privatized.
Nevertheless, Pemex lacks the necessary technology to conduct throrough exploration work in Mexican deep waters of the Gulf of Mexico, estimated to contain 53.8 billion barrels of crude over an area of more than 550,000 sq. kilometers (212,350 sq. miles).
Some 55 percent of those reserves are believed to lie in ultra-deep waters.
Recent administrations have therefore tried in vain to give the private sector a greater role in Mexico's oil industry.
In 1999, then-President Ernesto Zedillo of the once-dominant Institutional Revolutionary Party, or PRI, sent Congress a bill that would have opened up the electricity and oil industries to greater private investment.
In 2002, then-President Vicente Fox of the still-ruling, conservative PAN party also tried to push a bill through Congress to allow greater private participation in the oil sector.
In both cases, the measures were blocked due to fierce opposition from the majority of lawmakers and grassroots movements created to challenge any move toward privatization.
Pemex, which currently is building a new refinery, produced an average of 3.79 million barrels of oil equivalent per day in 2010, including 2.57 million bpd of crude.
Oil production has fallen steadily in recent years due mainly to the decline of the aging supergiant Cantarell field in the Bay of Campeche.