Following the announcement by Petróleos Mexicanos (‘PEMEX’) earlier today, Petrofac confirms that it has been declared the selected bidder on two integrated services contracts to develop the Magallanes and Santuario blocks (‘the blocks’) in Tabasco State, central Mexico. The contracts, which run for 25 years, will be signed on 18 October 2011 and Petrofac will take responsibility for field operations after an initial three month transition period.
Petrofac has committed to an investment of approximately US$500 million for a 90% interest in the contract to develop the blocks, while a subsidiary of PEMEX will retain a 10% economic interest in the contract. Petrofac will be reimbursed for 75% of its development expenditure through a cost recovery mechanism and will receive a tariff for each barrel of incremental production.
The blocks each comprise two mature onshore fields that have been operated by PEMEX since the early 1960s, and together have almost 1,000 wells of which around 100 are currently producing a total of approximately 14,000 barrels of oil per day. Under the terms of the contracts, Petrofac will provide a fully integrated solution to increase production through the reactivation and development of both blocks and managing their ongoing operation and maintenance. Petrofac will deploy approximately 150 staff across both blocks, with a focus on local employment in line with the group’s commitment to hiring and developing local resources. PEMEX will maintain responsibility for all current field based employees.
Andy Inglis, chief executive of Integrated Energy Services, commented: “We are delighted to be named as the selected bidder on these two important Production Enhancement Contracts by PEMEX following a highly competitive bid process. Our integrated service offering, which does not involve the booking of reserves or the reporting of production, is fully aligned with PEMEX’s requirement for a comprehensive long-term field development solution that enables it to retain full ownership and control of its own national resources. We look forward to establishing a long and successful relationship with PEMEX, deploying our broad capabilities and technical expertise to improve production on these fields and working to develop local resources in Mexico.”