Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace

Gas prices, explained

Oct 18, 2019

Latest Episodes

Download
HTML Embed
HTML EMBED
Click to Copy
Corner Office from Marketplace
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace
Download
HTML Embed
HTML EMBED
Click to Copy
This Is Uncomfortable
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report

Mexico’s auction of new areas for oil drilling succeeds

Nova Safo Oct 1, 2015
Share Now on:
HTML EMBED:
COPY

In an important moment for its future, Mexico on Wednesday awarded three out of the five areas in the Gulf of Mexico it had put up for auction to oil drillers.

The successful auction was a follow-up to an inauspicious start of Mexico’s attempts to open up its oil assets to foreign companies. The first auction of 14 oil contracts in July ended with only two successful bids.

Mexico is in the process of major oil industry reforms, ending its state-controlled monopoly of oil that’s led to aging infrastructure and falling production.

“Energy, oil specifically, underpins the public finances of Mexico,” says Tim Samples, a Mexican-energy analyst at the University of Georgia.

The Mexican government has seen its oil revenue decline during the past 10 years, from 41 percent of total revenue to 33 percent.

Two years ago, Mexico began an ambitious turnaround plan that hinged on foreign companies drilling on its lands to boost production and bring in more money. But the plan was hatched during a time when oil prices were about $100 per barrel. They have since plunged to half that amount.

“You have oil companies around the world struggling with their cash flow,” and being picky about new investments, says analyst James West of Evercore. Still, Mexico has enticing oil fields, he said, and oil companies plan for the future and will invest if the terms are right.

On Wednesday, Mexico tried again. This time, it offered better drilling areas, ones where exploration had already been done, and demanded lower royalty percentages. The changes worked.

Tim Samples says Wednesday’s auction was an important indicator. “It shows that the Mexican regulators have the ability to react, read the market and respond.”

Samples said Mexico still needs to make a lot more deals in order to get its oil economy back on track, but it managed to right its course on Wednesday.

If you’re a member of your local public radio station, we thank you — because your support helps those stations keep programs like Marketplace on the air.  But for Marketplace to continue to grow, we need additional investment from those who care most about what we do: superfans like you.

Your donation — as little as $5 — helps us create more content that matters to you and your community, and to reach more people where they are – whether that’s radio, podcasts or online.

When you contribute directly to Marketplace, you become a partner in that mission: someone who understands that when we all get smarter, everybody wins.

Check Your Balance ™️
Check Your Balance ™️
Personal finance from Marketplace. Where the economy, your personal life and money meet.

Thank you to all the donors who made our fall drive a success!

It’s Investors like you that keep Marketplace going strong!