Excessive bureaucracy often postpones contract timelines, making it hard for PEMEX to use its complete investment budget each year.
Oil service companies such as Halliburton company, Baker Hughes (BHI), and Servicios Integrales GSM, a company owned by Mexican tycoon Carlos Slim, were vying for the work. Other companies looking for a foothold in Mexico, such as Sinopec Corp, also participated in project meetings.
PEMEX believes the region a promising oil zone that will help compensate for plummeting output at the giant fields PEMEX found, developed and partially exhausted over the past 30 years.
Cantarell, PEMEX’s historic cash cow that at its peak provided 60% of Mexican crude, is heading into retirement and has dragged down the country’s overall oil production by a fifth since 2004.
Bidding will likely remain competitive when PEMEX reliance’s the tender. PEMEX plans to spend $11 billion over the next four years at Chicontepec, making it an attractive target for drillers struggling with a global industry down cycle.
During recent conference calls both Halliburton Company and Baker Hughes said Mexico, along with Brazil, will help compensate for declining activity in other oil regions around the globe. Mexico, which risks becoming an oil importer by 2015 at present rates of decline, has doubled its investment budget over the past seven years to try and reverse the trend.
PEMEX has still accelerated activity at Chicontepec even with the startup delays in 2008 – the project drove a 55% increase in overall drilling in the first quarter of 2009.
The problem is each well only produces around 100 barrels a day, proportionate to 10,000 a day at PEMEX’s best fields. The company is experimenting with methods such as injecting chemicals into the reservoir to loosen the oil from the source rock and improve extraction rates.
