UK's Petrofac says wins Mexico Pemex offshore Arenque contract

MEXICO CITY Aug 30 (Reuters) - British oil services firm Petrofac said Mexican state oil monopoly Pemex has awarded it a 30-year service contract for the offshore Arenque oil field.

A Pemex spokesman declined to confirm the deal on Thursday.

Arenque, located in shallow waters off Tamaulipas state in northern Mexico, was the largest block up for grabs during Pemex's second round of tenders for private service contracts in June. But Pemex rejected all bids at the time as each exceeded the $7.25 per barrel maximum bid price established by Pemex, and the auction was declared null.

Petrofac said on its website that the new contract will pay $7.90 per barrel of incremental production. During the first two years of the contract, the company said it plans to invest approximately $50 million in capital expenditures aimed at boosting output at Arenque, which currently produces about 5,600 barrels per day (bpd).

Arenque boasts 100 million barrels of total proven, probable and possible (3P) reserves.

Like all of Pemex's private service contracts launched last year, Petrofac will also receive 75 percent cost recovery on all development expenditures it incurs.

"We are delighted to have been awarded the Arenque contract, which further strengthens our relationship with Pemex," Andy Inglis, Petrofac Integrated Energy Services chief executive, said in a statement.

Petrofac already counts two other service contracts covering two additional oil fields with Pemex, and a third that it shares with oil services company Schlumberger.

Pemex has said the next round of service contracts will be tendered sometime in September and will feature six new blocks in the massive Chicontepec basin, home to 40 percent of the country's crude reserves.

Mexico launched the new incentive-based contracts after Congress passed a historic 2008 energy reform law to lure private capital into the country's lumbering energy sector.

Boosting oil production from the world's No. 7 producer is critical after Mexico lost nearly a quarter of its capacity between 2004 and 2009 due to the rapid aging of its largest oil fields and a lack of investment in exploration for new deposits.

Current oil output hovers around 2.5 million bpd.