Exploring and producing oil and gas in Latin America today can be a very exciting and rewarding business.
Mexico, from being the only hydrocarbon producing country of the world where private investment was not allowed, is starting, if timidly, to open up under the Multiple Service Contracts concept for gas production in the northeastern Sabinas and Burgos basins of the Gulf Coast ([PFItemLinkShortcode|id:46470|type:standard|anchorText:see related story|cssClass:|title:|PFItemLinkShortcode]).
This incipient effort, although not fully satisfying to many companies due to the constitutional limitation that precludes the booking of reserves by private firms, is nevertheless a big step. In its first phase, important organizations like Repsol from Spain, Petrobras from Brazil, Tecpetrol from Argentina and Lewis from San Antonio signed 20-year agreements amounting to more than $4 billion to extract, eventually, one bcf per day from sub-exploited tertiary plays.
Proof that these plays are not mature is the amount of wells that have been drilled south of the border -- 5,000, from which eight tcfs have been extracted, versus the more than 80,000 in the U.S. counterpart of South Texas Railroad Commission District lV, which have produced almost 70 tcfs from the same formations.
Following a second and perhaps a third round in the Burgos and Sabinas, the concept most likely will be applied in 2005 in the offshore of central Veracruz for dry non-associated gas, and in the Chicontepec for oil. That play is similar to West Texas' Spraberry -- but that contains more than ten times the OOIP of the latter.
Meanwhile the Mexican government's executive branch will continue pushing a congress dominated by the opposition to have the legal framework changed to make it more consistent with the ways industry works around the world. That means, allowing production sharing agreements or strategic alliances of the Mexican national oil company with major international enterprises, which would take place once companies are able to share in the upside.
The one area that is requiring these changes in a great degree -- and that eventually will surely see the participation of international companies -- is the GOM deepwater region. The government of Mexico lacks the resources to invest heavily in the search and eventual development of the hydrocarbons of this frontier basin, and Pemex has neither the experience nor the technology to do it -- reasons that will put the pressure for a change in the legal framework.
Further south of the border all kinds of opportunities are being made real, both onshore and offshore. This includes deep waters in countries like Trinidad, Venezuela, Colombia, Brazil, Argentina, Perú, Bolivia and some Central American nations.
The list includes even Cuba, with exploration and production being carried by private and national oil companies accordingly to the way it is done in the rest of the world.
Don't forget about three upcoming international meetings of note: