After a disappointing first round Mexico has decided to postpone its next offshore block auction and retool its tender contracts.
According to Reuters, Energy Minister Joaquin Coldwell said the government will alter the rules of its offshore tenders to make the deals more attractive to investors.
Mexico’s first ever offering of oil and gas blocks to private and foreign firms fizzled last week after upstreams scooped up only two of the 14 available permits.
Shallow water Block 2 and Block 7 were both awarded to a consortium made up of operator Houston-based Talos Energy with a 45 percent stake, Mexico-based Sierra Oil & Gas with a 45 percent stake and UK-based Premier Oil with a 10 percent stake.
Coldwell said in an interview with Foro TV on Tuesday that the government may relax a requirement that forces one member of a bidding consortium to serve as a guarantor and hold at least a $6 billion stake in the block.
The requirement was initially put into place as a way of protecting Mexico’s interest in case of a major accident, Reuters said.
“We are revising the issue of the guarantees,” Coldwell said.
The government may also change rules that bar a consortium from assigning a new operator if a previously selected operator withdraws.
Coldwell, who also serves as chairman of the board at Mexico’s Pemex, noted that the rule caused issues during the first auction round.
Second bids during an auction may also be allowed if the first round of bids fails to meet a minimum level set by the government.
“We are conducting a full evaluation in order to launch the deep water call for bids by the end of September and give us more time to perfect the criteria because we shouldn’t have any margin for error on that,” Coldwell told Foro TV.
Coldwell added that the a fifth auction round set to focus on shale and unconventional plays has been suspended pending further evaluation.
Blocks that weren’t bid on during the first auction can be offered again at a later date.
Last week’s auction marked the first time private and foreign investors have been allowed to enter Mexico’s oil and gas sector.
In August, the Mexican Congress passed sweeping reforms to open up the country’s oil and gas industry to private investment.
The reforms ended the 75-year monopoly held by Mexico’s state-owned Pemex and was the center piece of President Enrique Peña Nieto’s agenda.