Mexico auctions two-thirds of blocks in shallow water oil tender


UPDATE 2-Mexico auctions two-thirds of blocks in shallow water oil tender

(Adds details and comment from regulator)
    By Adriana BarreraMEXICO CITY, June 19 (Reuters) - Mexico on Monday auctioned
two-thirds of the shallow water oil and gas blocks up for grabs
in the latest round of its energy market opening, surpassing the
cautious estimates officials made last week.
    Italy's Eni <ENI.MI>, Colombia'sEcopetrol <ECO.CN> and
Capricorn Energy, a unit of Edinburgh-based Cairn Energy
<CNE.L>, were among the companies at the forefront of the
bidding for 15 blocks in the southern Gulf of Mexico.
    Ten of the 15 blocks were taken up in the auction.
    "This is a great result," Juan Carlos Zepeda, head of the
oil industry regulator known as the CNH, told a news conference.
    Eni took one of the blocks by itself and two in consortium
with other companies. One comprised Capricorn and Mexican oil
firm Citla Energy, the other was with Citla alone.
    Citla also partnered with Capricorn to win another block,
edging out Eni in a tie-breaker after a hotly contested bid for
the ninth block in which both made the maximum possible offer.
    Russia's Lukoil <LKOH.MM> also took a block, as did a tie-up
between France'sTotal SA <TOTF.PA> and Royal Dutch Shell Plc
    The potential output from the blocks auctioned could total
170,000 barrels per day of crude equivalent, and investments
could eventually reach $8.2 billion, Energy Minister Pedro
Joaquin Coldwell said.
    The auction was the latest step in Mexico's bid to attract
more private investment to the industry after Congress changed
the constitution in late 2013 to end the 75-year production and
exploration monopoly of state oil company Pemex.
    Pemex won two blocks in Monday's bidding: one in consortium
with Germany'sDeutsche Erdoel AG, and another with Ecopetrol.
The Colombian company also won a block with PC Carigali, a unit
of Malaysian oil firm Petronas.
    Spain'sRepsol <REP.MC> combined with the company Sierra
Perote to win another block in the southern Gulf of Mexico.
    Top government officials said before the auction they were
hopeful Mexico would assign at least one-third to 40 percent of
the blocks in the shallow water round. [nL1N1JD1LY]
    The auction was the fifth since the energy reform, including
one deep water and two previous shallow water tenders. The
previous ones yielded 39 contracts with forecast investment over
their lifespan of $48.8 billion, according to the government.
    Mexico hopes opening the energy sector will help reverse
years of declining crude output. Total crude production in
Mexico has fallen to 2.01 million barrels per day from a peak of
3.38 million in 2004.

 (Reporting by Adriana Barrera; Editing by Bill Trott, Leslie
Adler and David Gregorio)
 ((dave.graham@thomsonreuters.com; +52 1 55 5282 7146; Reuters
Messaging: dave.graham.thomsonreuters.com@reuters.net))


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