Shuai Pan
Country Manager
View from the Top

Chinese Onshore Drilling Rig Builders Aim for Growth

Wed, 01/21/2015 - 15:15

Q: What has been AHRT’s strategy in the Mexican oil market since it only recently entered the country?

A: Our company had already provided two rigs to PEMEX in the past so we did not blindly enter this market. Even so, we did not have many contacts. Before coming to Mexico, we were working in other Latin American countries such as Venezuela. Unfortunately, the country’s political and economic landscape changed for the worse after the death of President Hugo Chávez. We started to look for new opportunities in countries with strong oil and gas markets, so we leapt at the chance to enter Mexico after the Energy Reform. It is evident that this country’s oil and gas industry is far more complex than that of Venezuela. In Venezuela, the government takes charge of almost all processes involved in the exploration, extraction, and refining of crude oil. In Mexico, the industry is far more dependent on private providers. However, while big players such as Halliburton, Schlumberger, and Weatherford are here, much of the sector is taken up by Mexican SMEs.

Our strategy is to partner up with these companies, so we are seeking to make many contacts and create business synergies. It is well-known that contacts mean a lot in Mexico, so we are trying to establish as many relationships as we can. Besides this, one of our biggest advantages is the high level of technological innovation in our portfolio of complementary products. Another benefit of contracting with us is the financing schemes that we can provide to our customers as we are strongly backed by financial institutions such as China Development Bank and Sinosure. This means that, even if our equipment is not the cheapest, we can help customers with excellent financial support. Right now, the Mexican market is dominated by American companies, but our equipment standards are similar, so the only way to surpass them is through attractive financial packages. I would even say that Chinese and Mexican business cultures are compatible so, in many ways, Mexican companies will find it easier to do business with us than with American firms.

Q: How would you compare the technological standards of AHRT’s rigs to those of its competitors?

A: There are very few Tier 1 rig manufacturers in China and we are definitely among them. Our products have had a great impact, not only in our national industry, but in over 30 markets globally, including Mexico, Canada, and the US. Our company has grown thanks to the positive results our rigs have delivered to customers worldwide. We sell drilling rigs that are suited for a number of applications, including truck-mounted rigs, offshore rigs, and skid-mounted rigs. Furthermore, our rigs will be perfect for certain parts of Mexico such as Tabasco and Campeche, which will be the first states AHRT will cover in the country. We are confident of securing a good market share as our rigs are as reliable as European or American ones. They also comply with API standards, and are available at competitive prices. AHRT specializes in onshore drilling rigs, so we are busy approaching all the companies that are potentially bidding for onshore oil fields. Our current priority is to approach medium-sized companies since big oil companies with larger budgets will enter the country later.

Q: How has the drop in oil prices impacted AHRT’s operations and what is the company doing to counterbalance this effect?

A: It has definitely impacted our operations as the drop in oil prices has forced big international oil companies to reduce their CAPEX; they are currently focusing on maximizing their assets rather than investing in new equipment. The good news is that, despite falling prices, companies will still invest in Mexico. Once Round One is completed, companies will need a wide array of exploration and production technologies, which is where our rigs and our financial capabilities will make a difference. Companies entering the Mexican oil and gas market will need partners that can help them obtain the fastest returns on their investments. This is why we are planning to build a warehouse in Villahermosa or Ciudad Del Carmen to better serve the Mexican market than from our current warehouse in Houston.

Q: What role do you believe Mexico will play in AHRT’s global operations?

A: Mexico will play a very important role in our global strategy, not only because of the potential of its market, but also because of its connectivity with the US and Latin American countries such as Venezuela and Colombia. We believe that, by establishing our operations in Mexico, we will then be able to easily spread into Central America. However, we have to be careful to manage our expectations. Regardless of the business opportunities created by the Energy Reform, the oil price has severely slowed down the sector, so we need to set our priorities. At the moment, our focus is to approach potential customers to show them the important benefits they would attain by contracting our services.