ONGC Videsh (OVL), the overseas subsidiary of state-run explorer ONGC, is in talks with Petróleos Mexicanos (Pemex), the national oil company of Mexico for a potential tie-up to pick up equity in exploration and production assets in the Latin American nation. Recently, Mexico has opened up its acreages for foreign companies to explore for hydrocarbons after a more than 75-year hiatus.
Mexico is a new frontier. There is a new opportunity emerging for all aspiring companies. We have also activated our process. We are very much keen. We are in discussions, NK Verma, who took over as the managing director of OVL last week, told FE.
Verma did not divulge how many blocks OVL is targeting to bid in Mexico. Pemex plans to establish 10 joint ventures in mature, onshore and offshore areas by December 2015, the companys chief executive officer Emilio Lozoya was quoted as saying.
OVL is understood to have shown interest to pick up stakes in the round zero of acreages offered in July (similar to pre-NELP rounds held by India). Another round 0.5 would be announced in November, while the first round of auctioning is expected next year. Currently, Mexico is offering both onshore and offshore blocks and OVL already had a few rounds of discussion with Pemex.
Bloomberg quoted Mexicos energy minister Joaquin Coldwell saying the fields hold an estimated 20.6 billion barrels, enough to maintain production levels of at least 2.5 million barrels a day for the next 20 years.
The Modi government is asking state-run firms ONGC and Oil India to vigorously pursue acquisitions of oil and gas assets overseas. Petroleum minister Dharmendra Pradhan recently informed Parliament that India has ramped up crude oil imports from Mexico by 161% in the past five years to 98,800 barrels of oil per day.
In FY14, OVL acquired more than $5 billion in assets. The company teamed up with another state-run player Oil India to buy Videocons 10% stake in Mozambiques Rovuma Area 1 for $2.475 billion. Subsequently, OVL on its own bought another 10% stake in the same field from Anadarko Petroleum of the US for $2.64 billion.