Mexican State published the bidding guidelines and the contract model for
deepwater contracts related to Round One’s Fourth Call for Bids, available at: http://www.ronda1.gob.mx.
In line with
the best international practice, the guidelines to conduct this bidding process
are designed to guarantee that companies operating in deep and ultra-deep
waters of the Gulf of Mexico have proven capabilities and experience.
Therefore, the guidelines establish technical, financial, execution, industrial
safety and environmental protection requirements consistent with the highest
international standards. Similarly, and as in the three previous bids, the
Fourth Call Bidding Guidelines guarantee this process will be conducted under
principles of transparency, maximum publicity, equality, competitiveness and
Fourth Call for bids includes 10 exploration blocks located in deep and
ultra-deep waters. Four of these blocks are located in the Perdido Fold Belt
Area and six in the Saline Basin of the Gulf of Mexico. They have the following
exploration blocks located in the Perdido Fold Belt Area cover a surface area
of 8,218.2 km2 and contain an estimated prospective resource base of
3,557.7 million barrels of oil equivalent (mmboe).
exploration blocks located in the Saline Basin cover a surface area of 15,616.8
km2 and have an estimated prospective resource base of 6,979.5
provisions contained in the contract include:
- License Mode. This contract
modality implies that the main contributions to be paid by the contractor will
be calculated as a portion of its gross revenue, without cost recovery.
- Purpose of the Contract. The execution
of hydrocarbon exploration and extraction activities within the contractual
- Term. The contract shall have an
initial term of 35 years with two possible extensions of 10 and 5 years,
respectively, subject to achieving regular commercial production.
- Phases. The contract considers the
- An initial 4-year exploration phase, plus two
additional 3-year exploration phases.
- A 3-year appraisal period following any discovery.
- A development period of 22 to up to 37 years (subject
to maintaining regular commercial production).
- Initial Exploration Phase. During the
first four years of the contract, the contractor shall conduct the activities
required to fulfill the minimum work program as established in each contract.
- Additional Exploration Phases.
The contract foresees two additional exploration periods of 3 years each. To
qualify for this extensions, the contractor shall commit to drill an additional
exploration well in each period.
- National Content. The minimum
national content percentage requirements depend on the project phase as
outlined in the contract, and range from 3% to 10%.
Guarantee. The contractor shall present a standby letter of
credit, which shall be unconditional, irrevocable and payable to CNH, to
guarantee the execution of the minimum work commitment during the exploration
Guarantee. The contractor shall be financially backed by its
ultimate parent company or a duly capitalized affiliate company, to guarantee
the performance of the contractual obligations.
- Insurance. The contract
foresees the required main insurance policy features, which are in line with
the best industry practices.
Safety and Environmental Protection. The contractor
shall comply with applicable industry norms regarding industrial and operational
safety, occupational health and environmental protection.
- Exploration and Development Plans, Work Programs and
Budgets. The exploration and development plans shall be
approved by the CNH, whereas the associated annual work programs and budgets will
be merely informative.
- Administrative Rescission. As
defined by the Hydrocarbons Law. It considers a previous investigation stage
that may include the participation of an independent expert to determine the
Contractor’s willful misconduct or gross negligence.
- Contractual Rescission. Applicable
upon unjustified breach of contractual obligations, with the possibility to
access alternative dispute resolution mechanisms such as conciliation or
- Progressivity of the Fiscal Terms.
The contract foresees an adjustment mechanism to increase the government take
in case of windfall production results or prices’ increase.
To foster the
best conditions for the competition, the Bidding Guidelines of this Fourth Call
for bids present adjustments in relation to Round One’s previous bidding
prequalification of the interested parties. Companies will prequalify as
“Operators” or “Non Operators” according to their technical and financial
bidders shall include at least one interested party prequalified as “Operator”.
allow an optimum diversification of the associated risks, one interested party
may be part of more than one joint bidder, provided that such interested party
cannot present more than one proposal for the same contract area.
interested in prequalifying as Operators who have previously acquired
applicable information from the National Hydrocarbon Information Center will be
able to access the data room, without paying additional fees.
technical and financial prequalification information requirements have been
submission of proposals and award date will be announced during the third
quarter of 2016 at the latest, and will take place at least 90 days after its
bidding variables will be the additional royalty to be paid to the Mexican
State and the commitment to drill a well during the initial 4-year exploration
considering the volatility observed in recent months in the international oil
market and to guarantee the State’s best interest, the call for bids related to
heavy oil and extra heavy oil fields will be suspended until further notice.