Campeche Basin Port Development at a Crossroads

Q: How have the oil and gas sector’s essential activities in Ciudad del Carmen continued amid the COVID-19 crisis?

A: We have dealt with restricted schedules and hours at the ports. Our people who are in charge of physically delivering documentation and paperwork have followed all sanitary protocols, including the obligatory use of facemasks. It is important to highlight that all port captaincies are being very agile in delivering their services in a timely manner with the purpose of avoiding any congestion. We are coordinating with them in the most efficient way possible, and getting a lot of work done in the process. The needs of the active platforms are constant, and as such port agencies all over Ciudad del Carmen need to do whatever is necessary to maintain the one-in, one-out logistical rhythm.

In times of crisis, our No. 1 priority continues to be, as it always has been, safety and the protection of human life. We have to do what is necessary to make sure our personnel’s health and that of their families are maintained in peak condition. To achieve this, we implemented a home office policy whenever possible that allows us to keep up with our clients’ needs through phone and email. We acknowledge that our work and operational volumes have decreased considerably, but thankfully a number of our clients continue to operate, along with some of the larger companies, which has allowed us to maintain operational continuity. Our clients have mirrored our prioritization of sanitary measures. We both understand the fact that putting our workforce’s health at the top of our list of considerations is ultimately what will allow us to continue to do business and work together.

Q: What are the most important contracts and projects for 2020?

A: There were a variety of projects of interest being developed and executed. There were two that I would like to highlight. One involved the Port of Coatzacoalcos, where we worked extensively last year. We were returning to Coatzacoalcos this year to help Petronas with their nearby deepwater wells. Of the six wells contemplated in that current project, one has already been drilled. We have now been notified that the project will be delayed for three months. 

The vessels they were using to complete their drilling activities were crewed by a large percentage of specialized foreigners mixed in with Mexican personnel. Unfortunately, this created a logistical issue when the COVID-19 measures were implemented. Onboarding and offboarding of personnel not only from vessels but at airports and on buses created a great deal of risk. We have seen the outcomes of these risks with the COVID-19 cases in Ciudad del Carmen on oil and gas vessels and platforms. The diverse and multicultural characteristics of the industry’s workforce, which are usually a benefit, have now become a liability as more airports and routes worldwide begin to shut down and international companies put their internal risk policies into effect, which involves canceling all travel. This generates a great deal of uncertainty. In terms of shift changes, for example, performing and maintaining 15 or 20 shift changes becomes unfeasible. 

The other project was taking place in Dos Bocas and it involved the exporting of crude oil to Central and South America. We assumed the role of shipping port agent to all vessels involved in the route. It is technically continuing but it has slowed down considerably. The drop in oil prices has coincided with a drop in demand. Shutdowns have created a considerable decrease in consumption. 

Q: What do you expect the industry will require in the coming 30 to 45 days?

A:  The pandemic’s peak in Mexico still needs to be defined before we make plans and draft projections. Our project in Dos Bocas puts us in a good position. The Dos Bocas refinery has been considered an essential project so work has not been suspended. Most drilling companies operating out of Dos Bocas have also not completely suspended their activities for good, instead they have chosen to reduce their volumes of work. This means that we can look forward to a reactivation of activities, since these companies will have an easier time increasing their operational volumes instead of having to reestablish their presence at the ports.  

As a result, we will be able to reactivate some projects that were still in a preliminary planning phase. This includes a project we were looking into for the maintenance of monobuoys off the port of Tuxpan for CFE, which they use to receive fuel. The company in charge of that maintenance was contemplating doing business with us, not only for shipping and port agency services, but also for offshore vessel supply services, specifically the tugboat and another vessel that can supply surface divers and their equipment. These vessels are necessary to disassemble the monobuoys and give them the proper maintenance they need before reinstalling them. We were invited to do this work thanks to the relationship we have with the public sector contractor that does maintenance for CFE. The public sector has had to make tough decisions as well to appropriately respond to the COVID-19 situation, which has led this particular project to be temporarily suspended.

There are a number of other interesting projects that could be subject to reactivation as well. One is taking place in the Seybaplaya port. The Dos Bocas port is operating at a point of saturation. This means authorities have to start thinking about alternative ports. One is Frontera, where two dredging vessels are working to increase its draft. Another option is Seybaplaya, where existing facilities are already quite expansive and attractive. PEMEX intends to install some drilling mud storage and processing facilities at this port. As a result, they are also looking at the integration of all port spaces and resources, such as agencies and transportation companies and yards. The harbor space was recently expanded by 5km. They were even considering opening a section for tourists. In general, they are hoping to follow the development model of Dos Bocas, through private concessions and the investment that they bring.

Seybaplaya has been wanting to attract more investment for many years now. Unfortunately, they have struggled with vast distances between the port and the main platforms when compared to Dos Bocas, Frontera or even Ciudad del Carmen. However, the saturation at Dos Bocas has made this distance less of an issue and will hopefully result in the development of the Seybaplaya port, and the economic development and jobs that it will attract. While our experience with Coatzacoalcos was positive, particularly with all the public institutions such as API, and customs among others, they made it very clear to us that they were not an offshore port and that if offshore activities were to be conducted from their space, it had to be under their rules. Coatzacoalcos is stuck between two worlds, with the shipping, manufacturing and automotive export activity at the Port of Veracruz on one side and the almost entirely oil and gas driven activities of the Tabasco and Campeche ports on the other.   

Q: To what degree would the Dos Bocas saturation become even more pronounced once the refinery is finished?

A: To a lesser degree, thankfully. This is because Dos Bocas will mostly depend on an existing network of submerged underwater piping for both intake of crude and output of fuel to monobuoys. A bottleneck that might need additional attention to resolve could be land access and highways, since fuel transportation over onshore ducts is being strategically replaced with road transportation by trucks and rail, while the issue of huachicol fuel theft and illegal taps is resolved. The movement of major wet cargo vessels like tankers will increase in the gulf area surrounding the port, but thanks to this underwater infrastructure, this movement will not have to come into the port, which will remain saturated. The development plan to expand the Dos Bocas harbor space through private concessions will also continue throughout this time. There harbor space is available for additional concessions, but of course harbor space is of no use without corresponding yard space and land access of a proportional size. 

Q: What are the projects you will be working on in 2020?

A: The Petronas contract is one we are looking forward to finishing, along with our existing activities in Ciudad del Carmen and the possible activity in Tuxpan. Despite the current situation, we feel good about the future. Once these global industry situations are overcome, we expect there to be a great deal of growth, development and business opportunities for us.

H&R Naviera is a logistics agency with offices in Ciudad del Carmen. It conducts operations in the Gulf of Mexico. It specializes in providing services in customs clearance, maintenance, structures transportation, loading and offloading of units.