The autopsy has already begun.
As the world’s attention is transfixed by every new development in Chapo Guzman’s latest audacious prison break, something much more important – and potentially more dangerous – is happening in Mexico. Yesterday the country held its first auction of offshore oil leases, bringing to an end 77 long years of state control over energy.
Until yesterday, Petróleos Mexicanos, A.K.A. Pemex, the state oil company, ran all oil and gas production in Mexico. But that has now changed. With it a new age has begun, one in which Mexico’s energy sector will finally get the funds it needs to extract the vast hydrocarbon resources it has at its disposal. It will also get the technology it needs for deepwater drilling in the Gulf of Mexico as private companies, in particular from the US and the UK, provide essential know-how and best practices. In short, it is a perfect win-win for all concerned…
Or at least it was supposed to be, until the bottom fell out of the global oil markets. Now the stagnant market is overwhelmingly in the buyer’s favor and yesterday, as Bloomberg reports, the buyers weren’t interested in buying:
Mexico’s first auction of offshore oil leases fell short of the country’s expectations as several majors decided not to participate.
Only two of the 14 shallow-water blocks released on Wednesday received qualifying bids. Exxon Mobil Corp., Chevron Corp. and Total SA passed on the country’s sale of territory in the Gulf of Mexico, 77 years after the country nationalized crude. The 14 percent success rate was less than half the 30 percent to 50 percent goal that the government said would be its minimum for judging the event a success.
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