Mexico sweetens Pemex Trion JV terms for second time

MEXICO CITY (Bloomberg) -- Mexico has eased the terms of a joint venture with state oil company Petroleos Mexicanos in the deepwater Trion field to attract more bids.

Companies that have qualified as operators will be able to bid individually, the country’s National Hydrocarbons Commission, or CNH, said Friday. Previously, operators were required to bid in groups. Under the changes approved Friday, operators are entitled to a maximum 60% stake should they decide to bid alone, while Pemex will be required to have a minimum 40% share in the block. Non-operators must continue to bid within groups, CNH said.

“The substantive change is that in the previous version of the joint operating agreement the bids must include the formation of a consortia of at least two operators and this consortia must partner with Pemex,” said Commissioner Juan Carlos Zepeda during the CNH meeting in Mexico City. “Now this possibility exists, but it is no longer restrictive,” which helps competition, he said. According to CNH, the regulator received more than 200 questions from companies about the Trion bid terms.

The move follows criticism from industry members that the structure of the operating agreement had limited bid combinations by requiring the joint venture to include at least two foreign companies—a designated operator and a non-operator—plus Pemex, with the option of an additional financial partner. Only seven of the 10 companies qualified to participate in the auction are operators.

“We welcome the changes,” Pemex said in an emailed statement. ”CNH has considered the opinions of the companies, increasing the possibility that more bidders participate as our partners to develop the field.”

Mexico first sweetened the terms for Trion on Sept. 27 in response to industry criticisms. That included the reduction of Pemex’s stake in groups from 45% to 40%, limits to Pemex’s ability to remove an operator, and its liability for pre-existing damage to the Trion area. The field is part of the deepwater Perdido basin in the Gulf of Mexico.

The final contract terms for the Trion JV, which will coincide with Mexico’s first competitive deepwater auction on Dec. 5, will be published in two weeks, according to CNH.