BP sees growing investment in Mexico energy
MEXICO CITY, May 17: BP Plc's first foray into Mexico's recently opened energy market is proving more promising than expected, and the government should offer more big projects to lure investment, the British oil major's Mexico boss said in an interview.
Chris Sladen, country manager for Mexico, said BP expects to grow investment in everything from exploration to retail fuel sales, and looks forward to partnering with state oil company Pemex after losing an early chance for a lucrative tie-up.
Mexico wants to attract major investors to reverse years of declining crude output and rising dependence on US natural gas and fuel imports.
"To turn that ship around, you need a substantial number of large projects," Sladen said at BP headquarters in Mexico City. "I would encourage Mexico to offer substantial numbers of large projects because that's what it takes."
BP and others are growing their presence in Mexico after a 2013 energy overhaul ended Pemex's decades-long monopoly.
The British firm is already involved in three offshore projects, two in the Gulf of Mexico's deep waters and another in shallow waters. Sladen said initial company investment in all three could total "many hundreds of millions of dollars."
That investment would grow significantly, he added, if the projects are successful.
In 2015, Argentina-based Pan American Energy LLC [BPPAE.UL], which is 60 per cent BP-owned, won the rights to develop the Hokchi field in the Gulf's shallow waters.
Sladen said three of four committed exploration and appraisal wells have already been drilled there, and early data is promising.
"The initial results have suggested that the reservoir volume might be slightly higher than initially modeled. Perhaps it's 20 per cent higher," he said.
Late last year, BP partnered with Norway's Statoil [STLBR.UL] and France's Total SA to win development rights for two deep water blocks in the southern Gulf of Mexico's Salina basin.
Exploration plans for each of the blocks will be submitted to regulators by September, Sladen said.
While each of the three companies in the consortium has a one-third stake in both blocks, Statoil is the operator, responsible for executing the developments.
BP has maintained a presence in Latin America's second biggest economy dating back to the 1960s, and Sladen has been country manager since 2007.
The company narrowly lost out in December to Australian mining and oil giant BHP Billiton in its bid to partner with Pemex on its Trion deep water project, but Sladen still expects to tie-up with Mexico's former oil monopoly.
"I see a future of us co-investing with Pemex on major projects," he said, without going into further detail.
BP is still evaluating a range of projects at oil auctions scheduled for later this year, as well as possible investments in ports or storage facilities needed to import fuel, he added.
The company has created hundreds of local jobs with hundreds more likely in the near future as it cements its status as Mexico's first-ever integrated international oil firm, he said. �Reuters