Exxon, Chevron, Hess in joint bid for Mexican oil

Exxon, Chevron, Hess in joint bid for Mexican oil

Exxon Mobil Corp (NYSE:XOM), Chevron Corp (NYSE:CVX) and Hess Corp (NYSE:HES) are said to have agreed to jointly bid for rights to drill for crude oil in Mexico’s deep water oil areas.

The three US-based companies have reached a joint operating agreement, which allows the consortium to bid to produce oil in the 10 areas up for auction on 5 December.

Mexico hopes to raise US$44 billion in it’s first-ever sale of deepwater drilling rights in the Gulf of Mexico, found in the Perdido area near the maritime border with the US.

According to Pedro Joaquin Coldwell, Mexico’s Energy Minister, 76% of the country’s prospective oil resources are found offshore in deep waters.

Mexico approved final legislation in 2014 to allow foreign crude producers to operate in the county for the first time since 1938, hoping to reverse an 11-year decline in production.

The 5 December auction is expected to attract large foreign oil operators who have the expertise and capital to produce crude below the surface of the Gulf, which Pemex has been unable to do because of its lack of technology.

The companies that qualified to bid in the auction – Royal Dutch Shell (LSE:RDSB), Statoil ASA (STO:STLO) and BP Plc (LSE:BP), are expected to sign similar deals because Mexico’s government capital requirements for bidding are considered too big for individual producers.