Octavio Navarro
Country Manager Mexico
Heerema Marine Contractors
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Insight

Eight-Legged Horse' to Lead Turnaround

Wed, 01/18/2017 - 11:59

As Dutch marine contractor Heerema builds its massive new semi-submersible crane vessel “Sleipnir,” named after the mythical Norse god Odin’s eight-legged horse, Country Manager Octavio Navarro is optimistic that the firm’s slowdown in activity in Mexico will turn around.

New players are gearing up to switch on their drills on the offshore blocks auctioned in Rounds 1.1, 1.2 and 1.4 and Navarro believes they will quickly begin taking advantage of Heerema’s services, which include transporting, installing and removing offshore facilities in shallow, deep and ultradeep waters.

“Globally, business is more or less going well but in Mexico it has been a different story,” Navarro says. The difficulties faced by the company stem from a lack of projects put forward by PEMEX, Navarro says, and the low oil prices prevalent in 2015 and most of 2016 around the world only made problems worse for the offshore facility construction firm.

Global benchmark crude oils Brent and WTI reached prices as low as US$26/b early in 2016, according to the US Energy Information Administration (EIA) and Mexican Geological Survey (SGM), and despite doubling those prices by early March 2017 (US$54.65/b), they are still well below the over- US$100/b of the middle of 2014. Mexico’s crude mix fared no better, averaging US$35.63/b in 2016 compared with the US$85.48/b of 2014. Such lower prices led companies to slash budgets and cut projects around the world. In PEMEX’s case, this meant stringent spending reductions. The NOC’s planned budget for 2017 is around US$19.7 billion, 18 percent below the US$24 billion spending limit it had in 2016.

Despite the challenges, Navarro is excited about the capabilities that Sleipnir, which is expected to be completed in 2019, could eventually bring to the Mexican market with its two, 10,000-ton cranes and 220m-long deck that will make it the largest crane vessel in the world. “Specifically, the crane can be used for the installation of deepwater structures, a critical point to mention when considering the vessel’s possible use in Mexico,” Navarro says. One pressing issue the industry faces is Mexico’s lack of necessary infrastructure to support activity at increased depths, an area where Heerema sees opportunity. Sleipnir would be the fifth of a fleet of semi-submersible vessels that also include Aegir, Thialf, Balder and Hermod, Navarro adds.

As well as the advantage of a long history serving the Mexican offshore industry, Heerema will bring its focus on innovation and constant improvement to any new players it may work with in the country, including automating various processes within its vessels, although according to Navarro there is a limit to the extent digitalization can impact offshore construction operations. “Automating the insertion of equipment at depths of 3,000m is simply impossible at the moment because the procedure requires such a level of precision and safety that a human must carry it out.” Heerema’s manufacturing segment, Heerema Fabrication Group, is also involved in bringing R&D to the forefront of the company’s strategy and holds alliances with technology engineering firms such as Technip.

The lack of activity in recent years spurred the company to reduce its presence and close offices in Ciudad del Carmen and Tampico in 2016. But it kept its offices in Mexico City and Villahermosa, reflecting Heerema’s cautious optimism about future projects in the area. Navarro says the company is competing for one of PEMEX’s only ventures. “Our history with PEMEX has been gratifying and we are sure Mexico will continue to be a hugely important market for Heerema," says Navarro. Heerema, he adds, will be on hand with the latest technologies in platform construction and management.