STORY INLINE POST
Q: How did Mexico become a strategically important location for Odebrecht?
LW: Mexico’s series of successful reforms are part of a well-structured plan that is destined to boost its economic growth. The actions Mexico has already taken have sparked the attention of numerous potential investors, including Odebrecht. Our experience could directly benefit Mexico but we must attune that experience to local Mexican needs. Although the energy reforms in Brazil and Mexico are based on the same model, they have specific aspects that differentiate them. This makes it all the more important for Odebrecht to be present in Mexico, allowing us to better adjust our solutions to Mexican specifics. For this reason, Odebrecht decided to mobilize its oil and gas division in Mexico and pays great attention to the opportunities that may arise here.
Q: What is your impression of the way the Energy Reform has been implemented?
PS: My first impression, shared by most in the sector, is that the Energy Reform is astonishing. The pace at which everything is moving shows a real desire from the government to forge ahead. We were not expecting things to move so fast. While Mexico has done a good job at exploring and producing in shallow waters, its reserves in such fields are not as abundant as in the past. The Energy Reform will now allow the country to move on to deepwater and ultra-deepwater where the necessary investment might triple. In such a situation, help from abroad is needed in terms of technology and financing. This means the Reform was a great move, as it will attract large amounts of investment.
Q: What opportunities have you identified for Odebrecht in Round One?
PS: Our goal is to contribute with whatever Mexico needs, as long as it makes business sense to do so. Mexico does not need our expertise in shallow waters as it arguably has the greatest experience in that segment in the world. However, the technology we have deployed in Brazil for deepwater and ultra-deepwater could be a real asset. That is where we feel we can contribute the most and be more competitive. Alongside this, Odebrecht can also offer technology to increase production in mature fields.
LW: Outside of Round One, we have talked with several decision makers at PEMEX. All of them are focused on implementing the essence of the Energy Reform, but people are being moved around internally, which makes it challenging to work with the same counterpart for long. The rules are not totally defined yet, but when we get to Rounds Two and Three the situation will be much clearer.
Q: What would you like to see accomplished at the end of Round One?
PS: I would like to see the rules of the game be better defined and the opportunities to be clearly mapped. Moreover, PEMEX should become totally open to receiving help from specialized companies, as these could help it acquire new technology and record levels of investment. In the long term, I would like Odebrecht to be recognized as an important player in the Mexican market and, more importantly, as a Mexican company.
Q: How do you envision the drop in oil prices affecting the development of bidding rounds in 2015?
PS: Overall, the drop will have a strong impact as there is a direct relationship between the oil price and investment levels. On the other hand, what goes down must come up again. I do not see oil prices returning to US$140, but we are developing new ways to produce oil, which brings more competitiveness to the market. On the other hand, a price per barrel at US$46 cannot be sustained for long. The oil price will return to the level needed to justify new investments, and the market will accommodate to an average price of between US$70-85 per barrel.
Q: How are Petrobras’ economic and legal challenges affecting Odebrecht?
PS: The situation of Petrobras and its impact on Odebrecht is similar as in every other country that has major NOCs, such as Mexico, Venezuela, or Saudi Arabia. PEMEX, PDVSA, and Saudi Aramco are all in the same boat, as are the EPC companies that work with them. The investigation currently being conducted within Petrobras is a difficult matter. The situation has resulted in the Brazilian NOC cutting back on investments that do not make economic sense. This impacts all its providers, including Odebrecht.