Mexico has cut the level of required corporate guarantee for the second phase of its Round One auction of offshore oil and gas drilling blocks.
The change, approved by a vote of the country’s oil regulator CNH on Tuesday, is part of a response to the disappointingly poor take-up of bids in the first phase last month.
On that occasion when 14 shallow water exploration blocks were on offer only two were awarded. That fell below even the government’s own modest target of five.
Apart from the questionable appeal of those shallow water blocks, authorities felt the corporate guarantee may have been too much, putting off bidders.
Mexico is opening up its nationalised oil industry to outside private investment for the first time in 75 years.
The new corporate guarantee is set at 18 times the value of the minimum work commitment required by each contract.
Previously it required a consortium bidding on oil parcels must have one member act as a guarantor and hold shareholder equity of at least $6 billion to protect the state’s interest in the event of a major accident.
The next phase of the auction will cover five shallow-water extraction blocks containing proven reserves. and are set to be awarded at the end of September.