Mexico licensing round may herald even more opportunities

Pemex has officially launched Mexico's first exploration licensing round in more than 70 years. With only three onshore blocks available, the lease sale is much smaller than originally anticipated, but a major step-change for the country.

Since the 1920s, oil and gas exploration and production in Mexico has been limited to the state-run firm Pemex -- by law. Recent legislation changes have been enacted to allow outside producers to develop waning oil and natural gas fields in the country.

With much of the country's income based on oil production, Mexico must increase production onshore and offshore to ensure enough is in the coffer. The dilemma is that Pemex and its employees lack the skills, experience and technology to redevelop their aging fields -- as well as deepwater prospects in the Gulf of Mexico.

Enter international firms that can teach Pemex how to properly maintain production, redevelop waning production and tap ultra-deepwater formations.

While the three onshore blocks offered in the first licensing round may not attract the biggest players, it certainly is a major shift and represents a blooming opportunity for firms looking to boost reserves.

Additionally, shale developments in Mexico may offer even more opportunities for production.

While Mexico is widely known to hold large amounts of oil and gas onshore and in the Gulf of Mexico, Pemex is currently drilling its first well into the liquids-rich Eagle Ford Shale. Reports that the well is testing dry gas likely interests companies eager to develop shale reserves via horizontal drilling and hydraulic fracturing.

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Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.