You are using an older browser version. Please use a supported version for the best MSN experience.

Australia's BHP wins bid for Mexican block

AAP logoAAP 5/12/2016

Australian oil company BHP Billiton has won the bidding for an exploration and production contract with Petroleos Mexicanos (Pemex) in Mexico's deepwater Trion block, marking the state-owned oil giant's first partnership with a private energy company.

"This is a great day for Pemex, a historic day, it has been nearly 79 years since Pemex had a partnership on a risk basis with a private" firm, Pemex CEO Jose Antonio Gonzalez Anaya said on Monday.

The opening of the bids revealed a tie between BHP Billiton Petroleo Operaciones de Mexico and BP Exploration Mexico, a unit of British supermajor BP, with both companies offering to pay an additional royalty of 4 per cent.

The bidding rules called for the winner to be decided on the basis of who offered the most cash up front.

BHP's bid included $US624 million in cash, while BP offered $US605.9 million.

"We see attractive potential in Trion and the Perdido trend, and we are pleased to have the opportunity to further appraise and potentially develop this prospective frontier area of the deepwater Gulf of Mexico," BHP Billiton petroleum operations president Steve Pastor said in a statement.

Trion, which covers 1285 sq. km, is located about 200km off the coast of the northeastern state of Tamaulipas at depths of between 2090 and 2570 metres.

"This opportunity aligns with our strategy of owning and operating Tier-1 assets and provides an opportunity for BHP Billiton to leverage its industry leading deep-water drilling, development and operational expertise to create value in Mexico," Pastor said.

Trion, which was assigned to Pemex in the "Zero Round" of non-competitive bidding, has reserves of some 485 million barrels of oil equivalent (boe).

Pemex will have a 40 per cent stake in the project, while BHP will own the remaining 60 per cent interest.

Energy Secretary Pedro Joaquin Coldwell said the deal was a "gamechanger" for Mexico.

"This is how this stage of the energy reform takes shape and this will help Pemex tremendously," the energy secretary said.

The $US624 million in cash being pumped into the project by BHP are in addition to the $US570 million in initial investment, Gonzalez Anaya said.

image beaconimage beaconimage beacon