Global firms spurn opportunity to bid on Mexican oil, gas blocks

Mexico saw disappointing results on Wednesday in its first ever public bidding phase for oil and gas blocks in the Gulf of Mexico, with only two of 14 blocks being awarded, according to the National Hydrocarbons Commission (CNH).

The consortium made up of Sierra Oil and Gas, Talos Energy and Premier Oil was the day's only winner, having been awarded Areas 2 and 7 among the 14 shallow water blocks on offer.

The two awarded blocks appeared to have been the most attractive as Hunt Overseas Oil made losing bids on both, while the bids of Statoil and two consortias were rejected for Area 7.

Murphy Worldwide and Petronas teamed up for bids for Areas 3 and 4, but they were both rejected as being too low. India's ONGC Videsh tabled a bid for Area 6, but was also rejected.

Finally, nine of the areas received no bids, thus being declared as deserted and Area 6 as abandoned.

Juan Carlos Zepeda, president commissioner of the National Hydrocarbons Commission, said that Area 2 contains estimated reserves of between 142 million and 341 million barrels of oil, with Area 7 having an estimated reserve of 102 million barrels.

Prior to the results, he had forecasted that Mexico could expect a total investment averaging 1.3 billion U.S. dollars per block.

This poor turnout will also deal a blow to the aspirations of the government of President Enrique Pena Nieto, who had made the Energy Reform a cornerstone of his political legacy.

Doubts about the potential of this first phase of Round One began circling last week when four companies that had prequalified for the bids dropped out without giving reasons.

A Mexican national oil company, PEMEX, pulled out of the running last Friday, saying it would wait to bid for deepwater blocks later in the year. Endi