February 28, 2019 / 11:24 PM / a year ago

UPDATE 1-Pemex tie-ups to proceed despite Lopez Obrador's criticism

(Adds auction details)

MEXICO CITY, Feb 28 (Reuters) - Auctions later this year to pick joint venture partners for Mexican state oil company Pemex will proceed, an official at the national oil regulator said on Thursday, despite President Andres Manuel Lopez Obrador’s resistance to the tie-ups.

An official with the National Hydrocarbons Commission (CNH), the regulator that runs the auctions, said the joint venture auctions have not been canceled.

“They’re still going forward,” said Martin Alvarez, head of the regulator’s exploration contracts unit, on the sidelines of an energy forum in Mexico City.

Lopez Obrador has scrapped two separate oil auctions involving mostly natural gas and shale projects, breaking sharply with his predecessor who pushed the tenders to try to reverse a long slide in output.

Last week, Lopez Obrador appeared to suggest that his government will not offer private oil companies more opportunities to partner with Pemex until existing projects begin to show results. Three have been signed to date.

“When they begin to produce, we will review the possibility of continuing with these contracts, but right now they’re not producing,” said Lopez Obrador at a Feb. 21 press conference.

While Pemex’s flagship Trion deepwater project with partner BHP Billiton has yet to enter commercial production, two others - covering the onshore Cardenas-Mora and Ogarrio fields - are producing relatively small amounts of oil and gas.

The October auction covers seven onshore contracts which envision that Pemex’s prospective partners would operate the projects instead of the state-owned producer.

The contractual areas cover a total of 1,769 square miles (4,581 sq/km) and are believed to contain some 405 million barrels of oil equivalent in proven, probable and possible reserves.

The CNH webpage notes that 11 companies, including China Offshore Oil Corporation and Germany’s Deutsche Erdoel, have begun the process of pre-qualifying for the auctions.

Thirteen oil companies have already paid the registration fee for the auction, while 19 have formally expressed interest, according to CNH data.

Officials with Pemex and the energy ministry did not immediately respond to a request for comment.

At the same Feb. 21 press conference, Pemex CEO Octavio Romero also appeared to dismiss the auctions for the joint ventures, also known as farm-outs, scheduled to be awarded on Oct. 9.

“What has already been agreed to will stay on track. (The Pemex joint ventures) don’t exactly follow the logic we are pursuing right now,” said Romero. (Reporting by David Alire Garcia; editing by Cynthia Osterman and Tom Brown)

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