Mexican state-owned oil company Pemex has decided to delay the farm-out process for the Nobilis-Maximino deep-water block offshore Mexico.
The Nobilis-Maximino block is located in ultra-deepwater in the Cinturón Plegado Perdido area of the Gulf of Mexico, 230 kilometers off the coast of Tamaulipas and 15 kilometers from the maritime border with the United States.
The Mexican company started looking for a partner to carry out exploration and production activities on the Nobilis-Maximino area in September. However, Pemex explained last Friday that due to unfavorable conditions it had decided to delay the bidding process. The company added it would continue performing actions to reduce the risks inherent to the project.
“This is due to the mainstream forecasts of crude oil prices in the medium and long term, which have been reported to range between 50 and 65 dollars per barrel, and which at this point in time have caused international oil companies to be very cautious before committing to complex projects that require large investments and where investment returns are expected to be long term,” Pemex added.
According to the company, this is the case of the Nobilis-Maximino deep-water block, which requires an investment in excess of 10 billion dollars, and which is estimated to produce profits no earlier than six years after the project is launched.
Higher costs & complexity
While the costs for the development of deep-water projects have gone down internationally since 2014, specialized consulting firms estimate that the required oil balance price required for most deep-water developments remains higher than the forecast price. This has caused an important number of deep-water development projects to be deferred, while corporations wait for an improvement in financial conditions.
On the other hand, unlike the fields of the Trion block, the fields of the Nobilis-Maximino block have also shown an increased geological complexity, higher gas contents, and a flow depth of over 3 thousand meters, and therefore the balance price for this area is even greater.
The investment commitments recently acquired by the possible investors are yet another factor currently influencing the interest in new projects. This is the case of the important investments pledged to blocks in Brazil a few weeks ago by some of the companies that had access to the Nobilis-Maximino data room.
Back in late November, the President of Mexico, Enrique Peña Nieto, named Carlos Alberto Treviño Medina as Pemex new CEO.