Mexico Upstream Oil and Gas Industry Fiscal and Regulatory Report

The report “Mexico Upstream Fiscal and Regulatory Report ″ provides details of the new contractual frameworks introduced under Mexico’s energy reforms, defining factors affecting profitability and quantifying the state’s take from hydrocarbon production. The report evaluates political, economic and industry-specific variables and analyzes future trends for the country’s upstream oil and gas investment climate. Complete report is available @ .

With Mexican oil open to private investment for the first time, the country’s initial bidding round is expected to remain competitive despite low oil prices, delays and a number of uncertainties. This latest report states that the first bid round, which began on 11 December 2014 by offering 14 shallow-water exploration blocks, is currently scheduled to offer additional areas, including unconventional and deepwater opportunities, in the first half of 2015.

GlobalData’s Senior Upstream Analyst for the Americas, states that no indication has been given of the expected levels of biddable profit oil in the shallow-water Production Sharing Contract (PSC). Furthermore, full details of the other contract models are yet to be released. With the international crude oil price having dropped from nearly $110 per barrel (bbl) in the first half of 2014 to its current price of below $50 per bbl, the government has already been forced to deviate from its original schedule. In the past week, the government has admitted that it may need to further delay high-cost areas, such as unconventionals. On top of this, the new schedule appears ambitious for a regulatory agency organizing its first ever licensing round. Order a Purchase copy of this report @ . (This is a premium report priced at US$1000 for a single user License.)

“Scope of this report covers”: Overview of fiscal terms governing upstream oil and gas operations in Mexico; Detail on legal framework and governing bodies administering the industry; Levels of upfront payments and taxation applicable to oil and gas production; Details of the licensing process in ‘Round 1′; Explanation of production sharing mechanisms in Production Sharing Agreements; Information on the special fiscal regime applicable to PEMEX; Assessment of the fiscal regime’s attractiveness to investors; Outlook on future of fiscal and regulatory terms in Mexico.

Despite these delays, Will Scargill, GlobalData’s Upstream Fiscal Analyst, notes that the lower oil price should not significantly affect the competitiveness of bidding on the shallow-water exploration blocks, as the adjustment of royalties to prevailing prices and profit shares to profitability mean that it should remain possible for investors to achieve attractive rates of return.

Comparison of the regime with that applicable to shallow-water areas in the US Gulf of Mexico at oil prices of $60 to $80 per bbl suggests that bids offering the government an initial 20% share of profit oil may be competitive. When discovered fields are offered, the government take is likely to be higher due to the lower risk. For deepwater areas later in the round, the government is expected to offer royalty and tax licenses, reflecting the high costs and risks associated with this type of exploration and development. Although the full details of this contract model have not yet been disclosed, it is expected to use a similar adjustment mechanism for the biddable additional royalty to that used in the PSC.

Table of Contents

Regime Overview

Regime Flow Chart - Production/Profit Sharing Contract
Regime Flow Chart - Royalty and Tax License
Regime Flow Chart - Pemex Assignment Regime
Fiscal Take Assessment
Key Fiscal Terms - Production/Profit Sharing Contract
Key Fiscal Terms - Royalty and Tax License
Key Fiscal Terms - Pemex Assignments Regime
Regulation and Licensing
Contact Information

List of Tables
Mexico, Contractual Price for Crude Oil, Round 1 - Shallow Water (First Call)
Mexico - Pemex Assignment Regime, Profit Sharing Duty Rates (%), 2015 onwards
Mexico, Round 1 - Shallow Water (First Call), Schedule, 2014
Mexico, Round 1 - Shallow Water (First Call), Minimum Work Obligations, 2014

List of Figures
Regime Flow Chart - Production/Profit Sharing Contract
Regime Flow Chart - Royalty and Tax License
Regime Flow Chart - Pemex Assignment Regime
Mexico, PSA Bid Comparison - 30mmboe field (Oil price: US$60/bbl. CAPEX: US$12/boe. OPEX: US$8/boe), 2014
Mexico, Indicative NPV10/boe and Fiscal Take Comparison, Regional Peers
Legal Framework
Institutional Framework

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