U.S. Holds Gulf Of Mexico Oil And Gas Auction

(MENAFN- Yolo Wire) The Trump administration has announced the first auction of oil and gas drilling rights in the Gulf of Mexico since 2023.

The new auction comes as U.S. President Donald Trump seeks to unleash more domestic fossil fuel production.

The Gulf of Mexico auction is the first of 30 mandated by Trump's budget bill passed in Congress earlier this year.

The Trump administration plans to open offshore oil and gas leasing in a significant departure from that of his predecessor, U.S. President Joe Biden, who had paused oil and gas auctions.

The U.S. government is offering 81.2 million acres in the Gulf of Mexico at a royalty rate of 12.5%, the lowest permitted by Trump's new tax law.

Previously, oil companies were required to pay a minimum of 16.66% in royalties to the U.S. Treasury for rights to drill in the Gulf.

Trump lowered the royalty rate in an effort to encourage industry participation in lease sales. U.S. crude oil prices are down about 20% this year, which can limit investments by drillers.

Offshore production accounts for about 15% of U.S. oil and natural gas output but has lagged onshore shale fields in recent years because of longer timelines and higher upfront costs.

According to pre-sale statistics, 26 companies have submitted a total of 219 bids on 1.02 million acres, about 1.3% of the acreage that's now up for auction.

Major oil producers such as Chevron (NYSE: $CVX) and ExxonMobil (NYSE: $XOM) were expected to submit bids in the latest auction.

The last Gulf of Mexico sale in 2023 attracted 352 bids by 26 companies covering 1.73 million acres. It raised $382 million U.S., the highest of any federal offshore lease sale since 2015.

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