May 27, 2015
Mexico Round One – Third Bidding Process
As part of the implementation of the Mexican Energy Reform, the Mexican government has selected
certain fields that will gradually be tendered to foreign and domestic companies for hydrocarbon
exploration and production projects. Round One includes 109 blocks for exploration and 60 blocks for
production, and covers new areas of different sizes and types of resources, including (i) deepwater,
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(ii) shallow water, and (iii) onshore fields. Together, these blocks cover approximately 28,500 km , and
amount to an annual investment of close to US$8.5 billion.
As previously reported, the National Hydrocarbons Commission (Comisión Nacional de Hidrocarburos)
(“CNH”) has announced two international public bids – one for 14 exploration and production blocks in
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shallow waters, and the other for nine production blocks in shallow waters . The winner will be awarded
production sharing contracts.
General Description of Third Public Bid Call
On May 12, 2015 the CNH published the third international public bid call to award 26 license contracts
for onshore production of hydrocarbons. This is the first bid covering onshore areas and is the first time
in Mexico for license contracts to be awarded.
The 26 blocks are distributed in the northern states of Tamaulipas and Nuevo Leon and in the southern
states of Veracruz, Tabasco, and Chiapas. The blocks are divided into two categories: (i) Contract Blocks
Type 1, which, according to the CNH, have a volume of remaining recoverable hydrocarbons of less than
100 million barrels, and (ii) Contract Areas Type 2, which, according to the CNH, have a volume of
remaining recoverable hydrocarbons equal to or higher than 100 million barrels. A license contract will be
issued for each contract area.
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To read more about the international public bids CNH-R01-L01/2014 and CNH-R01-L02/2015, please refer to our previous alerts,
found in the links below:
- Mexico Round One – First Bidding Process
http://www.haynesboone.com/news-and-events/news/alerts/2014/12/23/mexico-round-one-first-bidding-process
- Mexico Round One – Second Bidding Process
http://www.haynesboone.com/news-and-events/news/alerts/2015/03/04/mexico-round-one-second-bidding-process
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(a) Size of the contract areas. The total area under this third bid round is 807.1 km , broken down
as follows:
Contract
Area
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
Name of the Area
Anáhuac
Barcodón
Benavides
Calibrador
Calicanto
Carretas
Catedral
Cuichapa Pte.
Duna
Fortuna Nacional
La Laja
Malva
Mareógrafo
Mayacaste
Moloacán
Mundo Nuevo
Paraíso
Paso de Oro
Peña Blanca
Pontón
Ricos
San Bernardo
Secadero
Tajón
Tecolutla
Topén
Area (Km2)
29.5
11.0
135.5
16.1
10.6
89.4
58.0
41.5
36.7
22.0
10.2
21.2
29.8
21.9
46.3
27.7
17.0
23.1
26.0
11.8
23.7
28.3
9.8
27.5
7.2
25.3
Type of Contract
per Area
Type 1
Type 2
Type 1
Type 1
Type 1
Type 1
Type 1
Type 2
Type 1
Type 1
Type 1
Type 1
Type 1
Type 1
Type 2
Type 1
Type 1
Type 1
Type 1
Type 1
Type 1
Type 1
Type 1
Type 2
Type 1
Type 1
Fields
(as classified
by the CNH)
Burgos
North Fields
Burgos
Burgos
South Fields
Burgos
South Fields
South Fields
Burgos
South Fields
North Fields
South Fields
Burgos
South Fields
South Fields
South Fields
South Fields
North Fields
Burgos
North Fields
Burgos
Burgos
South Fields
South Fields
North Fields
South Fields
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All photos from National Hydrocarbons Commission (Comisión Nacional de Hidrocarburos) (“CNH”):
http://ronda1.gob.mx/Espanol/licitacionencursoL03.html
Burgos
South Fields
North Fields
Technical Bid Information:
(a) Type of Extraction Contract. License Contracts.
(b) Term of the License Extraction Contract. 25 years from the execution of the contract. The term
of the contract may be extended for two additional terms of five years (unlike contracts for shallow
waters, the base term is 30 years).
(c) Governing Law. Hydrocarbons Law (Ley de Hidrocarburos), Hydrocarbon Regulation
(Reglamento de la Ley de Hidrocarburos) and the Administrative Rules for the Tender of E&P
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Agreements (Disposiciones Administrativas en materia de Licitaciones de Contratos para la
Exploración y Extracción de Hidrocarburos).
(d) Location of the Contract Areas. Onshore fields located in Tamaulipas, Nuevo Leon, Veracruz,
Tabasco and Chiapas.
(e) Language of the Proposal. Spanish.
(f) Bid Bond. For each Contract Area Type 1, participants must provide a stand by letter of credit for
a total amount of US$65,000; and for each Contract Area Type 2 for a total amount of
US$200,000. Each standby letter of credit must be granted for a term of 60 (sixty) days from the
date of submission of the proposal.
(g) Requirements of the Bidder to Access the Data Room. The interested party must be a
company with proven experience in E&P activities and must pay a fee of MX$2.5 million.
(h) Registration Payment. MX$280,000.
(i) Form of Participation. Companies may participate in the bid as individual bidders (each an
“Individual Bidder”) or as joint bidders (“Consortium” and jointly with the Individual Bidder, a
“Bidder”). Either as an Individual Bidder or a Consortium, a Mexican entity must be created as a
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special corporate purpose vehicle to execute the License Extraction Contract . One or more
companies may submit a joint bid, acting as a Consortium, pursuant to the following:
•
Any of the companies of the Consortium may pay the fee to access the Data Room and be
registered in the Bid;
•
Only joint bids from a Consortium that obtains a prequalification certificate will be accepted,
and therefore, any new company that is not member of the Consortium in the prequalification
stage will not be accepted. After the prequalification stage is over, another member may be
added to the Consortium;
•
A company may only be part of one Consortium in the Bid;
•
The operator must have at least one third of the economic participation in the Consortium and
no other member of the Consortium may have an economic participation larger than that of
the operator;
•
All the members of the Consortium must execute, among themselves, a Private Joint Bidder
Agreement in accordance with Form CNH-4 included in the Bidding Guidelines; and
•
A Consortium may not have more than one “Big Scale Oil Company” as a member. “Big
Scale Oil Company” is defined as a company that directly or indirectly, by any affiliate or
controlled company, had an average production of oil, gas or condensates equivalent to
1.6 million barrels per day in 2014.
(j) Prequalification Requirements. Participants in the Bid must satisfy certain financial and
expertise conditions to be prequalified. Some of the requirements are applicable only to the
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The License Extraction Contract must be jointly executed by the Individual Bidder or Consortium and the Mexican entity. The
Individual Bidder or Consortium are jointly liable along with the Mexican entity for purposes of the License Extraction Contract.
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operator and may be satisfied by an affiliate depending on the case. The requirements in general
include the following:
1. Experience. The Bidder must provide evidence that:
a. The proposed personnel who will hold key operational positions within the operation of
the License Extraction Contract have at least 10 years of experience, managing and
operating offshore or onshore E&P projects; and
b. It has experience in industrial and environmental safety within the previous 5 (five) years
to the bid.
2. Financial. The Individual Bidder must provide evidence that:
a. It has a total equity of US$5 million for each Contract Area Type 1 upon which the
Individual Bidder will submit an economic proposal, or US$200 million total equity for
each Contract Area Type 2 upon which the bidder will submit a proposal. If participating
in a Consortium, the Individual Bidder must demonstrate an equity interest of
US$3 million for each Contract Area Type 1 and US$8 million for each Contract Area
Type 2, but the other two members of the Consortium must demonstrate an aggregate
equity of at least US$80 million for each Contract Area Type 2 upon which the
Consortium will bid; and
b. The operator has at least one third of the economic interest in the Consortium.
(k) Limit to award Contract Areas. There is not a limit. A Bidder may present bid proposals for all
Contract Areas.
(l) Timeline of Award Process
•
Date of the Call. May 12, 2015.
•
Registration Payment. From May 12, 2015 to August 28, 2015.
•
Access to the Data Room. From June 1, 2015 to December 14, 2015.
•
Delivery of Prequalification Documents. From September 14, 2015 to October 2, 2015.
•
Prequalification Period. From August 31, 2015 to October 30, 2015.
•
List of Prequalified Bidders Published. October 30, 2015.
•
First Clarification Stage. From May 12, 2015 to August 11, 2015.
•
Second Clarification Stage. From May 12, 2015 to August 27, 2015.
•
Third Clarification Stage. From May 12, 2015 to October 30, 2015.
•
Updated Version of the Bid Guidelines. August 28, 2015.
•
Final Version of the Bid Guidelines. November 2, 2015.
•
Final Version of the License Extraction Contract. November 2, 2015.
•
Date for the Submission of Proposals. December 15, 2015.
•
Opening of Proposals. December 15, 2015.
•
Date of the Award. December 17, 2015.
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•
Date of the Execution of the Extraction Contract. February 8, 2016.
(m) CNH criteria to determine the Winning Bidder. The CNH will grant the Extraction License
Contracts to the highest bids, based, generally, on a combination of the highest offered royalty
and investment factors.
For more information in connection with this third bidding process, please contact any of the following
lawyers:
Mexico
Houston
Dallas
William (Hunt) Buckley
+52.55.5249.1812
[email protected]
Ricardo Garcia-Moreno
+1 713.547.2208
[email protected]
Terry W. Conner
+1 214.651.5604
[email protected]
Luis F. Moreno Trevino
+52.55.5249.1821
[email protected]
George Y. Gonzalez
+1 713.547.2011
[email protected]
Alberto de la Peña
+1 214.651.5618
[email protected]
Ariel Ramos
+52.55.5249.1820
[email protected]
Bradley J. Richards
+1 713.547.2028
[email protected]
Eduardo Corzo Ramos
+52.55.5249.1817
[email protected]
Jorge Maldonado
+52.55.5249.1853
[email protected]
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