Veracruz, Mexico - Mexico has given the go-ahead to Italian oil company Eni to drill offshore in the Gulf of Mexico.

Eni won an auction in late September to the rights to acreage in the southern Gulf of Mexico in the Bay of Campeche. The acreage is for shallow water tracts, and Eni won the rights to the Amoca, Mizton and Tecoalli oil fields. Together, the three fields could hold 800 million barrels of oil and 480 billion cubic feet of associated natural gas.

The September auction was the second installment of the "Round One" auction, as it is called. The first sale took place in July and yielded disappointing results. The September auction fared better, with Mexico awarding three out of the five contracts that were up for bid.

On December 1, Eni announced that it had signed a production sharing contract with Mexican authorities in Mexico City. The three conventional fields are located in shallow water at depths of just 20 to 40 meters, and are also close to shore. Eni says that they are located "in a context where Eni possesses proven expertise and where it operates worldwide with high efficiency and low operating costs."

Eni plans on drilling four wells to help delineate the extent of the oil bearing zones. Based on the results it will come up with a fast track development plan.

The successful agreement for the production sharing contract shows both the determination on behalf of the Mexican government to breathe some life into its oil industry, and also the seriousness upon which Eni is treating the newly offered Mexican oil assets.

The agreement bodes well for Mexico's ability to open up its energy sector to investment and reverse what has been several years of persistent declines in output. If Eni is successful, it will spark much greater interest in Mexico's oil potential.

Meanwhile, Mexico is gearing up for the next auction. On December 15, Mexico will tender 25 oil onshore oil and gas fields, in the third iteration of the "Round One" auction. On November 30, the government announced that winning companies must bid a minimum of 1 to 10 percent of pre-tax profits.