Mexico City — Mexico’s oil regulator announced on Thursday the cancellation of October auctions to pick joint-venture partners in seven onshore areas for state oil company Pemex, which is struggling to reverse more than a decade of falling crude output.
The move represents a fresh blow to the flagship energy reforms of Mexico’s previous government that had allowed Pemex to partner with private oil companies for the first time in an effort to boost production.
The news confirmed a Reuters report.
Joint ventures aimed at developing oil and gas projects, or “farmouts,” have been seen as a way to help reverse a nearly 15-year slide in output by luring significant outside investment from private partners.
Other oil auctions to offer exploration and production rights were previously canceled by Mexican President Andres Manuel Lopez Obrador, who has criticized former President Enrique Pena Nieto’s reforms.
The leftist has instead focused on downstream investment, including a plan to build an $8-billion refinery.
He has also pledged to engineer a turnaround for Pemex, the world’s most indebted oil company that is increasingly grappling with investor skepticism.
Last week, Fitch became the first major ratings agency to downgrade Pemex’s bonds to “junk” status. This week, central bank governor Alejandro Diaz said Mexico should reinforce Pemex’s creditworthiness.