Mexico finalizes business-friendly terms for first deep water project

Mexico's oil regulator approved on Friday a final set of business-friendly tweaks to bid rules for a highly-anticipated upcoming auction that will pick a partner for state oil company Pemex to develop its first-ever deep water project.

The joint venture covers Pemex's Trion field and marks a major step in the opening up of Mexico's oil industry, a process enabled by a landmark energy reform in 2013 that permits Pemex to enter into exploration and production joint ventures for the first time.

Trion is located at a depth of 2,500 meters (8,202 feet) in the Gulf's Perdido Fold Belt just south of Mexico's maritime border with the United States. The field is believed to contain some 480 million barrels of oil equivalent.

Among the final changes to the bid terms, the oil regulator, known as the CNH, voted to eliminate a provision in the joint operating agreement that would have given Pemex the power to unilaterally remove the oil company chosen to operate the project.

The CNH also voted to eliminate a cash bond that was included in the joint operating agreement, leaving just a bond set out in the license contract, as well as specifying that the operator will have the "decisive vote" in the event of any work program disagreements.

The CNH previously voted to lower Pemex's minimum stake in the project from 45 percent to 40 percent.

The license contract, similar to a concession, will be awarded on Dec. 5, the same day that the regulator will also auction 10 separate deep-water fields, including four that surround Trion.

Pemex has estimated that the Trion project will require a total investment of about US$11 billion.