Gabriel Ruiz Quoted in El Financiero on Pemex, Farmouts, & More

“Should Pemex produce everything?”

Since I began to cover issues of the energy sector, more than ten years ago, it was said that Pemex faces one of its most complicated moments in modern history, as its main source of oil, the once mega-field Cantarell, located in the Sonda de Campeche , was in frank decline.

“It is understood that the diversification of risk and collaboration between companies means greater chances of success in highly complex projects, in terms of technical and financial capabilities,” explains Gabriel Ruiz, partner at the Thompson & Knight firm.

Currently, Pemex has eight contracts of this type in force, through which, according to information from the Ministry of Energy itself, 2 thousand 19 million dollars have been invested, out of a total of 4 thousand 582 million committed, and that they contributed the not inconsiderable amount of 21 thousand barrels per day during September.

With this contractual tool, income is also generated for the Mexican State for the signing bonus, royalties, contractual fees and the percentage of operating profit (in the case of shared production contracts); in addition to the participation of Pemex in the economic benefits that correspond to it under the respective exploration and extraction contract, according to the expert.

“The farmout scheme allows the State to maintain direct, inalienable and imprescriptible ownership of all hydrocarbons found in the subsoil of the national territory,” says Gabriel Ruíz.

So why, if farmouts sound so good, does the Q4 government keep them in the freezer? According to Gabriel Ruiz, the only thing that is needed is political will, since there is no deadline , although there is an urgency to retake them.