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Analysis

Breaking Market Entry Barriers

Tue, 01/22/2013 - 12:59

Geolog has been active in the mudlogging industry for over 30 years. Today, Geolog is present in over 35 countries and has over 200 units operating worldwide, but the company did not enter Latin America until 2007 because of the various complications these markets represent. Mexico has been one of the most complicated markets for Geolog. The company has been able to acquire contracts with large oilfield service providers such as Schlumberger, Halliburton and Baker Hughes in Mexico, but Christian Genty, Regional Manager at Geolog International BV, says that the company has not been able to work within the Pemex system of tendering because there are too many cultural di†erences and the market protection for local companies is very strong. Furthermore, he believes that one of the greatest obstacles to successfully working with Pemex is e†ectively communicating the value proposition that his company o†ers. “Pemex must understand that the di†erent services we o†er will not only help to optimize their oil and gas operations, but will ultimately add more value than the actual cost of our services in the long run,” says Genty.

Although it seems that the main obstacle to convince Pemex to use its advanced technology is cost, one cannot underestimate the importance of the cultural di†erences. “To introduce technology, most of the time you have to change the way people work, and since people do not like change and the technical specifications applied to tenders do not match our international expectations, winning a contract with Pemex becomes di·cult for us,” Genty adds. He also sees contracting issues. “The contracting system is extremely complicated, and prioritizes cost over value,” Genty says. “Our private sector clients are every satisfied with our services and work, but we don’t seem to get a foot in the door with Pemex. Our hopes rest in Pemex changing its contracting formula, raising its technological specifications.” Genty believes deepwater is the most tangible opportunity for Pemex and Geolog to work together in the near future. “Our monitoring tools, if applied to deepwater operations, can make the di†erence between quickly spotting anomalous issues, as opposed to spotting them too late,” explains Genty.