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Analysis

Balance Between National and International Players

Tue, 01/22/2013 - 13:26

With the new Integrated Service Contracts (ISCs) being awarded to private national and international companies, Pemex has finally found a formula that allows private companies to invest and profit in Mexico’s oil and gas sector based upon their performance, e·ciency, and application of technology, explain the CEOs and founders of Zenteno Lira, Humberto Lira Mora and Javier Zenteno Barrios.

Even though it has been di·cult for companies to adapt to Mexican business practices, culture, and customs, these new contracts have succeeded in bringing foreign investment into the country’s oil and gas market. However, Mexican companies are competing for contracts against some of the largest oil and gas companies from around the world, Lira Mora and Zenteno Barrios claim that the largest problem facing domestic companies is the lack of an adequate response to market opportunities, which Lira Mora believes will continue to be the case in the near future. “For example, the electricity industry opened up and there is not one Mexican company producing energy for the market; the gas transportation industry opened up and only a couple of Mexican companies are involved in two projects; and the natural gas industry opened up and only one Mexican company is participating in projects,” says Lira Mora.

For this reason, Lira Mora and Zenteno Barrios believe that, if they are not able to win contracts or do not have the necessary business model to react to market opportunities in a timely fashion, there are other ways that Mexican oil and gas companies can participate in the market. They argue that Mexican companies should not fear the larger international companies they are competing with; on the contrary, they believe that Mexican companies should try and create strategic alliances, though before this can happen on a regular basis there needs to be a comprehensive energy reform and a solid and embedded regulatory framework.

Furthermore, Lira Mora and Zenteno Barrios are concerned that many Mexican companies do not understand or capitalize on the value they can o†er to international companies, since most international companies in Mexico require Mexican companies’ support in advertising, commercial and sales activities, as well as in other operations such as installation, transportation, and the maintenance of equipment and facilities. “There is enough work for everyone and great synergies could be formed that benefit both national and international companies,” explains Zenteno Barrios