Clarity, Transparency to Boost National Content

You can watch the video of this presentation here.

On Day 2 of Mexico Oil & Gas Summit, taking place online for the first time, Marcos Ávalos, Head of the National Content, Supply Chain and Energy Sector Investment Unit at the Ministry of Economy, presented the second panel of the day, addressing the topic of contracting with operators and the outlook for demand.

Ávalos’ presentation dealt with the new methodology that defines the amount of national content in upstream oil and gas operations. He continued discussing strategies for the industrial promotion of local supply chains and direct investment in the hydrocarbon industry (ENFOCAPI). Other themes he touched upon were training and the transfer of technology, “a non-negotiable part of an open market,” Ávalos said.

National content was meant to be a major boon for local talent. By having access to some of the world’s biggest companies, people could learn and develop. Nevertheless, how and where this local content is applicable is a source of confusion for both national and international operators. During yesterday’s panel, Andres Brügmann, Country Manager of Fieldwood Energy said that having deep knowledge of local content requirement guidelines is essential, because being a Mexican company did not guarantee strong local content provisions.

The methodology to define national content takes various areas into account. “But the methodology is complicated and difficult to understand,” Ávalos said, which leads to a chain of errors from the very first calculation. Therefore, a new methodology will be proposed, focusing on six easily understandable variables and a transparent, digital platform will ensure its success: “We need to automate everything through a digital platform to have immediate insight on national content. Clarity is of the essence when it comes to these policies. Transparency for national content is therefore crucial,” said Ávalos.

Regarding the strategies that are intended to boost ENFOCAPI, a new strategy would be published within the coming months, Ávalos added. Defining potential demand is crucial to make the calculations work, which is more difficult as a result of the pandemic. The supply chain is suffering from the general downturn in the sector. Nonetheless, by defining national content and working on promoting local players, the supply chain then works to enhance its own skills. As a result, knowledge and progress can be achieved.

Regarding training and technology transfer, Ávalos noted that public, private and academic entities would need to combine efforts to truly make this area a success. Even though the pandemic makes it difficult to align objectives, there are plenty of opportunities to improve. In the end, this will trigger an enhanced economic growth, he said.