BP plc’s (BP - Free Report) natural gas marketing and trading unit in Mexico, BP Energia Mexico, has started to supply about 200,000 million British Thermal Units per day (mmbtu/d) in eight states in the country.
The customers range from industrial users, local distribution companies and independent power producers in Mexican states of Nuevo Leon, Coahuila, San Luis Potosi, Veracruz, Mexico State, Guanajuato, Tamaulipas and Queretaro. This arrangement makes the oil giant one of the first private companies to deliver natural gas locally under the country’s energy restructuring program.
Earlier this year, CENAGAS, Mexico’s national center for natural gas control, had awarded pipeline transportation rights at an auction to BP. The company began delivering immediately. Besides agreements with other transporters and local distribution companies, BP has also inked a firm transport agreement with CENAGAS, to provide package deals for delivery of natural gas.
BP’s presence in Mexico dates back over five decades, when it began with marketing and distribution of Castrol. BP participated in the country’s first tender for deepwater licenses in December 2016, where it won interests in two exploration blocks in Cuenca Salina in the Southeast Basin. Thereafter in March, BP opened its first fuels retail site in Mexico and proposes to open about 1,500 sites across the country over the next five years. Other oil and gas companies operational in Mexico include Tesoro Corporation and Royal Dutch Shell plc (RDS.A - Free Report) .
Recently, BP along with its co-venturers inked a modified and restated Azeri-Chirag-Deepwater Gunashli (ACG) field production sharing agreement (PSA), which extended the production sharing deal for the country’s massive ACG oilfields until 2049. The current deal was slated to end in 2024. The co-ventures included Chevron Corp (CVX), Statoil ASA (STO) ExxonMobil Corp (XOM - Free Report) , among others.
These agreements are a result of BP’s appraisal of its exploration portfolio where it reiterated that it is refocusing growth in natural gas and advantaged oil in regions where the company presently functions. It is also seeking for prospects to develop new production regions while abandoning less competitive exploration prospects. These initiatives will likely support the company with growing and sustainable free cashflows, which it can distribute among its shareholders.
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