Héctor Moreira Rodríguez
Professional Board Member
Pemex
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View from the Top

Bringing Innovation to Pemex to Increase Production

Tue, 01/22/2013 - 13:33

Q: The level of technological prowess is a critical success factor for any oil and gas producer. What has been done in order to bring further innovation to Pemex?

A: Last year, Pemex approved its Strategic Technology Plan and some of the first projects are already in progress. For example, we have prioritized shale gas, making the largest investment in one project in Pemex’s history, and we are starting to see the results of this investment. However, its outcome will all depend fully on the energy reform, because if shale gas is opened to private investment, then the entire technology plan for shale gas will have to be revaluated. For this reason we are currently trying to predict how the new energy reform will eventually unfold, even though these predictions are di·cult to impossible to make, in order to allocate the necessary economic resources for the technologies needed in each field.

I believe Pemex has done a great job in its naturally fractured reservoirs, becoming world leaders in this area. Nonetheless, in non-fractured onshore fields like Chicontepec – where we have invested a lot of money, resources, and time – we have not been as successful. Regarding shale gas, since we are just beginning to enter into this field, we still have to decide the where, when, what, and how, but due to its potential, I truly believe shale gas can be the future of Mexico.

Q: What is the role of the field development division in the innovation process within Pemex?

A: The structural change and the creation of the development division are extremely important, but it is at the end of the chain. What has changed the most at Pemex is the perception of the importance of technology, what it can o†er, and the value it brings to the company. In the past, Pemex would sign a contract with a private company and would only be concerned with the end result, such as well depth or number of pumps installed. However, Pemex has evolved to become more involved in what technologies will be used, always specifying in the contracts the di†erent expectations the company has for each technology and the importance of training Pemex personnel.

Q: How does Pemex make sure that new technologies introduced in Mexico result in knowledge and technology spillovers that create additional value for the company?

A: If we change the incentives we will be attracting di†erent types of companies. In the end it has to do with your contracting scheme and the incentives you give companies to come and work in Mexico. Regarding technology spillover, we have to make sure that technology is not simply a means to an end, but rather, a means to educate and train Mexicans, so that in the future we will not depend solely on private companies for high-end technological projects.

Q: How can the recent change in Pemex’s purchasing scheme, and the introduction of framework agreements, potentially improve access to technology for Pemex?

A: The change is already there, but it has taken people some time to understand the importance of this change in the purchasing scheme, which will truly help Pemex in acquiring new technologies, by making the purchasing process more transparent and the technology transfers smoother.

In the past, Pemex was very limited in terms of gaining access to new technologies, but Pemex is currently using a purchasing system based on incentives, which is a more sophisticated system that allows us to acquire the best technologies while rewarding companies appropriately. Essentially, through this new purchasing scheme we are incentivizing the return on investment for companies o†ering technology.

Q: How can Pemex use the integrated service contracts to attract new technology and increase production?

A: We have to create competition by attracting more companies to compete for contracts. If instead of having three companies bidding for a contract we had 10, we would be creating more competition, lowering prices, and creating additional value for Pemex and the Mexican oil and gas industry, which is the aim of the third round of integrated service contracts. Besides, even though these integrated service contracts have limitations, they still o†er great opportunities based on incentives.