Mexico Upstream Fiscal and Regulatory Report - Minimum Bids Set for Deepwater Round

 Published On: Sep, 2016 |    No of Pages: 39 |  Published By: GlobalData | Format: PDF
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Summary

“Mexico Upstream Fiscal and Regulatory Report - Minimum Bids Set for Deepwater Round”, presents the essential information relating to the terms which govern investment into Mexico’s upstream oil and gas sector. The report sets out in detail the contractual framework under which firms must operate in the industry, clearly defining factors affecting profitability and quantifying the state’s take from hydrocarbon production. Considering political, economic and industry specific variables, the report also analyses future trends for Mexico’s upstream oil and gas investment climate.

Scope

- Overview of current fiscal terms governing upstream oil and gas operations in Mexico
- Assessment of the current fiscal regime’s state take and attractiveness to investors
- Charts illustrating the regime structure, and legal and institutional frameworks
- Detail on legal framework and governing bodies administering the industry
- Levels of upfront payments and taxation applicable to oil and gas production
- Information on application of fiscal and regulatory terms to specific licenses
- Outlook on future of fiscal and regulatory terms in Mexico

Reasons to buy

- Understand the complex regulations and contractual requirements applicable to Mexico’s upstream oil and gas sector
- Evaluate factors determining profit levels in the industry
- Identify potential regulatory issues facing investors in the country’s upstream sector
- Utilize considered insight on future trends to inform decision-making

1 Table of Contents
1 Table of Contents 1
1.1 List of Tables 3
1.2 List of Figures 4
2 Regime Overview 5
3 State Take Assessment 9
4 Key Fiscal Terms- Production/Profit Sharing Contract 11
4.1 Royalties, Bonuses and Fees 11
4.1.1 Royalties 11
4.1.2 Exploration Rental Fees 12
4.1.3 Hydrocarbon Activity Tax 13
4.2 Cost Recovery 13
4.2.1 Cost Recovery Limit 13
4.2.2 Recoverable Costs 13
4.2.3 Uplift on Cost Recovery 14
4.3 Profit-Sharing 15
4.4 Direct Taxation 17
4.4.1 Corporate Income Tax 17
4.4.2 Deductions and Depreciation 17
4.4.3 Withholding Tax 17
4.5 Indirect Taxation 17
4.5.1 Value Added Tax 17
4.5.2 Customs Duties 17
4.5.3 Landowner Compensation 18
4.5.4 Carbon Tax 18
4.5.5 Abandonment Fund 18
4.5.6 State Participation 18
5 Key Fiscal Terms- Royalty and Tax License 19
5.1 Signature Bonus 19
5.2 Royalties 19
5.3 Additional Royalty 19
5.3.1 Profitability-based Adjustment Mechanism (Deepwater) 19
5.3.2 Production-based Adjustment Mechanism (Onshore and Shallow-water) 21
5.3.3 Exploration Rental Fees 22
5.3.4 Hydrocarbon Activity Tax 22
5.4 Taxation 23
5.5 Abandonment Fund 23
5.6 State Participation 23
5.6.1 Regular Licensing 23
5.6.2 Farm-Outs 23
6 Key Fiscal Terms- Pemex Assignments Regime 24
6.1 Upfront Payments 24
6.1.1 Royalties 24
6.1.2 Exploration Rental Fees 24
6.1.3 Hydrocarbon Activity Tax 24
6.2 Profit Sharing Duty 24
6.3 Taxation 25
7 Regulation and Licensing 26
7.1 Legal Framework 26
7.1.1 Governing Law 26
7.1.2 Contract Type 26
7.1.3 Title to Hydrocarbons 27
7.2 Institutional Framework 27
7.2.1 Licensing Authority 27
7.2.2 Regulatory Agency 27
7.2.3 National Oil Company 28
7.3 Licensing Process 28
7.3.1 Migration of Assignments 28
7.3.2 Licensing Rounds 28
7.3.3 Registration and Prequalification 29
7.3.4 Bidding Requirements 31
7.3.5 Evaluation of Bids 32
7.4 License Terms 33
7.4.1 Duration and Relinquishment 33
7.4.2 Exploration Obligations 34
7.4.3 Local Content 35
8 Outlook 37
9 Contact Information 39

1.1 List of Tables
Table 1: Summary 5
Table 2: Mexico, Formula-Based Price for Crude Oil, Rounds 1.4-2.2, 2015-2016 12
Table 3: Mexico, Formula-Based Price for Crude Oil, Rounds 1.1-1.3, 2015 12
Table 4: Mexico, Initial Contractor Share of Profit (%), Rounds 1.1 and 1.2, 2015 16
Table 5: Mexico, Signature Bonus and Additional Pemex Cost Carry Value, Trión Farm-out, 2016 19
Table 6: Mexico, Additional Royalty Adjustment Mechanism, Round 1.4 and Trión, 2016 20
Table 7: Mexico, Additional Royalty Adjustment Mechanism, Round 1.3, 2015 21
Table 8: Mexico, Additional Royalty Rate (%), Minimum and Winning Bids, Round 1.3, 2015 22
Table 9: Mexico - Pemex Assignment Regime, Profit Sharing Duty Rates (%), 2015 onwards 24
Table 10: Mexico, Round 1 Schedule, 2015 29
Table 11: Mexico, Round 2 Schedule, 2016 29
Table 12: Mexico, Round 1.1 and Round 2 Prequalification Requirements, 2016 30
Table 13: Mexico, Round 1.1 and Round 2 Minimum Work Commitments, 2015 and 2016 31
Table 14: Mexico, Work Unit Value, 2015 34
Table 15: Mexico, Work Unit Value, 2016 35
Table 16: Mexico, Round 1 and 2 Local Content Requirements (%), 2016 36

1.2 List of Figures
Figure 1: Regime Flow Chart - Production/Profit Sharing Contract 6
Figure 2: Regime Flow Chart - Royalty and Tax License 7
Figure 3: Regime Flow Chart - Pemex Assignment Regime 8
Figure 4: Mexico, Indicative NPV10/boe, IRR and State Take Comparison, Internal, 2016 9
Figure 5: Mexico, Indicative NPV10/boe, IRR and State Take Comparison, Regional Peers, 2016 10
Figure 6: Mexico, Legal Framework 26
Figure 7: Mexico, Institutional Framework 27


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