Russia’s Lukoil wins auction for oil block in Mexico

MEXICO CITY, Jun 20 (PRIME) -- LUKOIL International Upstream Holding, an affiliate of Russian oil major Lukoil, has won an auction for a 521 square kilometer oil block in the Cuencas del Sureste province of Mexico, according to information obtained by PRIME late on Monday.

Lukoil offered the royalty of 75% for the right to develop the block.

Mexico auctioned 15 oil blocks on the shelf of the Gulf of Mexico in the Tampico-Misantla, Veracruz, and Cuencas del Sureste provinces. In total, 26 companies from 15 countries competed in the auction. RN-Shelf South, a subsidiary of Russian oil major Rosneft, was also qualified to take part in the auction, but it did not bid due to unknown reasons.

Pavel Suprunov, head of Mexico’s representative office of LUKOIL International, told PRIME that Lukoil sees investment in the oil block in Mexico amounting to at least U.S. $50 million.

“So far we are talking about one well. The project is of a geological exploration character, we are not discussing production. We estimate our investment at no less than $50 million,” he said, adding that the company has 90 days to sign a contract and works on the block will start after 2017.

“We will continue participating (in auctions) as Mexico has huge potential. They have announced some auctions, we will analyze it, but we have no decision (to participate in further auctions) so far,” he said.

Besides Lukoil, DEA Deutsche Erdoel of Russian businessman Mikhail Fridman’s LetterOne won the auction for a second block in a consortium with Mexico’s Pemex.

Mexico Energy Secretary Pedro Joaquin Coldwell said that Mexico auctioned 10 out of 15 blocks on Monday, and expects companies to invest $8.192 billion in development of the blocks and create 82,000 jobs. The maximum combined daily production at the blocks is expected to reach 170,000 barrels of oil equivalent, he said.

Other winners include Eni, Ecopetrol, Capricorn Energy, Citla, Sierra Perote, Repsol, Shell, and Total. The next round of the auction will be held in July.

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