(Bloomberg) -- BP Plc is seeking to get rid of its oil assets in Mexico amid a shift in its business strategy toward renewable energy and a challenging political climate in the energy sector in the country.
Since winning three exploration contracts in partnerships with France’s TotalEnergies SE, Equinor ASA, Qatar Petroleum and Hokchi Energy six years ago, BP has sold off its participation or is in the process of returning the blocks it won to the National Hydrocarbons Commission, the nation’s regulator, according to a company representative.
A representative of the CNH, as the regulator is known, did not respond to a request for comment. BP’s plan was reported earlier by Bloomberg Linea.
BP is among a number of major oil companies that flocked to Mexico following its historic oil opening in 2013 and 2014 that introduced competitive oil auctions for the first time in about eight decades in the resource-rich country.
While companies have had some success in discovering and developing oil fields, the rise to power of President Andres Manuel Lopez Obrador in late 2018 has made operating in Mexico more challenging for them.
The nationalist president has sought to dial back the previous government’s energy reforms and return the state oil giant Pemex to its former glory by reducing competition with private players. There are no more oil auctions in the country and at least one company, Talos Energy, has threatened international arbitration after the government determined that Pemex should operate the mega oilfield the Houston driller discovered.
Read More: Mexico Oilfield Dispute Is an Industry Warning, Talos Chief Says
Oil majors are also under pressure to reduce their carbon footprint and many are shifting toward renewable energies.
This month, BP received authorization from the CNH to return its share of a contract in shallow waters that it won in a consortium with TotalEnergies, Qatar Petroleum and Hokchi. In February, Total bought BP and Equinor’s shares of one deep-water block, and another in which BP shared with Equinor and Total was returned to the state.
BP concluded that the shallow-water block had a “very low” probability of success and the commercial viability of the prospect was unlikely, a BP spokeswoman told Bloomberg News.
BP maintains an indirect interest in Mexican blocks through Hokchi Energy, which is owned by Argentina’s Pan American Energy, a joint-venture between BP and Bridas. It also has more than 500 service stations in the country and sells natural gas to industrial clients in Mexico.
©2022 Bloomberg L.P.
BNN Bloomberg Picks
Loonie struggles: This is what is dragging the Canadian dollar lower
Bruce Campbell's Top Picks: September 27, 2022
Lagging loonie highlights importance of portfolio currency strategy
Apple music takes over Pepsi as presenter of Super Bowl halftime show
Five-out-of-six major Canadian airports fell below North American satisfaction average
Argentina government intervenes after country runs out of World Cup stickers