César Vera
Chief Commercial Officer
Naviera Integral
Expert Contributor

The Dynamics of Offshore Drilling in Mexico and Latin America

By César Vera Méndez | Mon, 09/13/2021 - 13:10

In the words of Peter F. Drucker, “Long-range planning does not deal with future decisions but with the future of present decisions.”

Imagine planning a long family trip. It is of the utmost importance that the costs, timing, routes and preferences of your traveling party are clearly and fully considered before leaving home to ensure the journey is as pleasant as possible.

How does that relate to business planning?

There are three primary challenges facing the oil and gas industry today:

  1. To produce more at a lower cost and with less emissions.

This trend started in 2015 and has achieved remarkable results. And although the price of oil and gas is not under the control of the operators, controlling how much money they spend annually for drilling and service companies certainly is. And so it is with the efforts and technological improvements to produce with less emissions.

  1. To keep up with demand and counteract the underinvestment since 2015 with a collective investment in the industry.

Once the global capacity is depleted, there will be a need to reinvest to maintain and grow oil and gas production sustainably. Not reaching these objectives could lead to a period of higher oil and gas prices that could cause a detrimental effect on business sustainability.

  1. A need to show capital discipline and consistently return money to shareholders.

The COVID-19 pandemic and its effect has delayed the oil and gas companies’ positive goal to keep their expenditure down while rewarding investors with predictable returns. As the world recovers from the pandemic, the hard work of the O&G companies might not be obvious.

Have you thought about the priorities for the transition between your company's current situation and what this will be in five or 10 years?

Have you considered alliances to maximize your efforts? And with whom?

Can you visualize the possible routes to reach your long-term goals?

Take into consideration that these questions would need to be revisited along your journey to readjust your strategy(ies).

Mexico’s O&G industry might seem ambiguous given changing regulations, scattered exploration campaigns, adjustment of production goals and COVID waves that threaten economic activity. Nevertheless, decisions need to be made. For that, one needs to keep one's ambition up, build up strong relationships along the way, identify and recognize the different scenarios and routes available and be flexible and resilient when conditions become difficult.

Likewise for Latin America. There are new developments in the works in Colombia, Guyana and Suriname. Uncertainty or ever-changing conditions are naturally expected; therefore, the same rules of thumb are applicable.

What is your take on this? Let's talk!

Photo by:   Cesar Vera