March 6, 2017 / 7:40 PM / a year ago

UPDATE 1-Mexico starts process to pick partner for new tie-up with Pemex

(Adds details on auction)

MEXICO CITY, March 6 (Reuters) - Mexico’s oil regulator voted on Monday to begin the process of choosing a partner for national oil company Pemex to develop its Ayin-Batsil field, the second such joint venture as Mexico seeks to reverse a dozen years of declining crude output.

Pemex will maintain a 50 percent stake in the shallow water project but will not be its operator, according to initial bid terms approved by the National Hydrocarbons Commission, the oil regulator known as the CNH that manages oil auctions.

The Ayin-Batsil joint venture will be Pemex’s second such tie-up following the selection of Australian mining and oil firm BHP Billiton in December to operate the Trion deep water block near the U.S.-Mexico maritime border in the Gulf of Mexico. BHP Billiton holds a 60 percent stake and Pemex 40 percent.

The auction to pick Pemex’s partner for Ayin-Batsil is scheduled to take place on June 19 and will feature a 30-year production sharing contract for pre-qualified oil companies with potential contract extensions of up to 10 more years.

Ayin-Batsil is next to three other blocks up for auction in a shallow water tender also set for June. The project features an estimated 281 million barrels of oil in proven, probable and possible reserves based on past Pemex discoveries and located at a water depth of 525 feet (160 meters).

The auctions administered by the CNH are a result of a sweeping energy reform passed in 2013 that ended the decades-long monopoly enjoyed by Pemex and allows private and foreign oil companies to operate fields on their own as well as in equity partnerships with the Mexican oil company.

Pemex crude oil production has fallen from a peak of 3.38 million barrels per day (bpd) in 2004 to average just 2.15 million bpd last year.

CNH commissioners also opted to rename the project from the original Ayin-Xulum to avoid confusion with another oil field, said CNH president Juan Carlos Zepeda. (Reporting by David Alire Garcia and Adriana Barrera; editing by Grant McCool)

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