Eni Grows BigBy Peter Appleby | Mon, 11/08/2021 - 11:49
Q: How is Mexico positioned in Eni global upstream portfolio and what are the conditions that should prevail to maintain the country’s competitiveness?
A: Mexico is a core country in Eni’s global portfolio, as we see a strong potential in it as demonstrated by our exploration portfolio. In order to maintain a solid position in the country, legal certainty and rule of law are key components for our long-term plans.
While there is significant growth in Block 1 from a production perspective, Eni also holds interests in seven exploration blocks in the southern offshore basin. We currently operate five offshore blocks and participate in two non-operated blocks. The exploration drilling results have already led to the identification of important hydrocarbon volumes.
Undiscovered hydrocarbon resources represent an important goal for the Mexican energy sector in the coming years, and an opportunity for private companies to share best practices; we strongly believe that their participation in upstream is creating additional value in the country not only in terms of investment and technical expertise, but also support to the local communities.
Q: How has the arrival of COVID-19 and the new price environment changed or altered Eni’s intentions in the Mexican market in terms of Block 1’s development?
A: As with many other energy companies facing the effects of COVID-19, we had to make some adjustments in our activities that don’t represent an impact on Eni Mexico’s performance.
The pandemic has further increased our focus on Health, Safety and Environment (HSE) and on the sustainability of our business. We changed how we do things, we adapted to smart working, maintained the health of our workforce and at the same time continued with our operations.
On our Block 1 Project, despite the restrictions caused by COVID-19, we installed our second platform, “Amoca,” in 2Q21. Our Floating Production, Storage and Offloading (FPSO), “Miamte” will arrive on Mexico's shores by the end of 2021 while we continue developing our drilling campaign.
Q: Following the vast increase in hydrocarbon volumes in place Eni has achieved in Block 1, how did this change the drilling strategy towards the entire Block’s development?
A: Eni is globally recognized as a top explorer and this expertise has borne fruit in Mexico as well. In the country, the company has leveraged its unparalleled exploration expertise and proprietary technologies, which in the last decade has allowed us to discover world-class reserves in Mozambique (Mamba, Coral) and in Egypt (Zohr), among others.
The company operates Block 1, located in the Southeast Basin of Mexican Gulf of Mexico. The Block covers 67 km² and includes three fields: Amoca, Miztón and Tecoalli.
In 2019, the field Miztón in Block 1, started early production. In 2021, Miztón reached the peak production of more than 26,000 barrels of oil equivalent per day.
As a result, the main strategy for Block 1 is the implementation of an accelerated development plan with an early production phase on Miztón field, in order to start producing at the earliest while the production ramp up will happen by early 2022 with the arrival of the FPSO.
Block 1 is the ideal project to leverage our strong expertise in bringing similar developments on stream, optimizing time to market and costs.
Q: How suitable is Mexico’s value chain to speedy development of an offshore block, in terms of quality and availability of service providers, and how can the presence of IOCs help develop companies along this offshore value chain?
A: Eni is known for having a very well-structured Vendor Management System. Selection of vendors follows a rigorous due diligence and qualification process. Since the beginning of our operations, we have had a very positive response from the service providers in the local market. It is well known that most international oil & gas service providers have established local branches in Mexico. Furthermore, we have seen evidence of local vendors advancing technical expertise, performance, HSE and other behavioral standards to enable them to meet the requirements of the IOCs. We are pleased to have already registered approximately 350 vendors within Eni Mexico’s vendor database for over 850 “commodity codes'' of goods and services representing our operational needs. It is important to indicate that 90 percent of our vendors are Mexican companies.
Like our experience in other countries, we are certain that as a result of Eni’s operations in Mexico, local companies will gain opportunities in providing services of higher complexity and will benefit from the implementation of International Oil & Gas standards.
Time to market and cost optimization have been demonstrated to be the two major elements of the value chain in our industry, and the IOCs with diversified experiences can definitely play an important role in ameliorating those barriers. Our experience in Mexico has demonstrated the great capacity of the country to re-adapt industry standards to new challenges with an organized Administration, Institutions and qualified available providers. We are certain that Mexico is a great country to develop our E&P projects and we are proud to contribute to the Mexican Government’s goals of increasing hydrocarbon production.
Q: At the beginning of 2020, Eni reported its discovery of the Saasken Exploration Project in Block 10 following the drilling of Saasken-1 NFW. What were the critical moments along the timeline of this discovery?
A: The discovery of Sáasken in Block 10, made in 1Q20, represents the first successful result in this operated exploratory asset and the sixth consecutive successful well drilled by Eni Mexico in the Southeast Basin. The discovery is estimated to contain up to 300 million barrels of oil. The Saasken 2 appraisal well will be drilled by the end of 2021.
Following this successful discovery, Eni announced another oil discovery, Sayulita, in Block 10 in August 2021. Sayulita is the seventh successful well drilled by the company in the Southeast Basin and the second commitment well of Block 10. It is located approximately 70 kilometers off the coast and just 15 km away from Saasken.
Even though the pandemic brought a massive supply chain disruption and market re-alignment during the exploration phase of Block 10, we were able to continue our operational activities with even a greater focus on Health, Environment and Safety standards.
Q: In May 2019, Eni signed an agreement with the State of Tabasco Governor Adán Augusto López Hernández for the Cooperation on the Pillars of Safety, Education, Employment, Health and Environmental Sustainability initiative. What are the practical, sustainable improvements that this collaboration will bring to the Block 1 and people surrounding Eni’s operations?
A: Eni sustains that there cannot be development for the company if there is no development for the communities where it operates. The Collaboration Agreement signed between the Government of Tabasco and Eni Mexico lays the foundations to promote social and environmental sustainability.
This collaboration aims to join efforts for medium and long-term projects, seeking to generate long-term, sustainable development based on the respect of human rights. The collaboration with the Government of Tabasco guarantees that our initiatives are aligned with the social objectives defined locally. This results in our projects having a greater benefit for the communities.
We are currently implementing social investment projects focused on education, health and economic diversification.
In education, the objective is to guarantee a quality, inclusive and effective elementary education for around 1,500 boys and girls in 10 communities of the School Zone 46, located in the Municipality of Cardenas, Tabasco. Together with the State Ministry of Education, we have designed a set of activities related to training school personnel in promoting child and community participation, supporting school nutrition, and rehabilitating the educational infrastructure of 13 elementary schools.
In partnership with Tabasco´s Ministry of Health, we have carried out measurements of weight and height, as well as laboratory tests for approximately 1,400 children in 3 communities, in order to be able to detect and care for children with nutritional deficiencies.
To improve access to health, we have contributed to the maintenance and rehabilitation of the health center in Villa and Puerto C. Andres Sanchez Magallanes. This initiative has included the donation of an ambulance and the regular donation of medicines.
To address the COVID-19 pandemic, Eni Mexico supported the Government of Tabasco with the donation of 100,000 masks, 10 intensive therapy lung ventilators and a PCR thermal cycler, along with reagents and tests.
Over 3,900 food packages and cleaning kits were delivered to more than 3,000 families in 18 communities affected by the restriction of mobility, with limited access to sources and food centers. To support the prevention of the virus, we promoted a radio awareness campaign on the station with the greatest Block coverage, reaching more than 2 million people in Veracruz, Tabasco, Campeche and Chiapas.
We are also designing and carrying out projects in different productive sectors. In the formal fisheries sector, we are currently implementing a pilot project for the cultivation of oysters through Australian baskets and a project for the repopulation of natural oyster banks.
Eni Mexico also works to improve community infrastructure, such as building and reconstructing around 7 km of roads in four communities, reaching almost 11,000 inhabitants.
Through these practices, we seek to create value in the Block by promoting the generation of local capacities that contribute to the transformation of the community from the community itself.
Q: What are the expected employment opportunities to be generated by Eni’s involvement in the Mexican economy and how is the company achieving its local content requirements across its activities?
Our most valuable asset is our people. We consider a key factor to our success in Mexico our formation of a multicultural team integrated with high-skilled Mexican colleagues. It is important to highlight that the company encourages gender diversity and promotes inclusion and equal opportunity when recruiting from the local market.
Despite the pandemic, this year we are planning to keep our employment program to directly contract more local workforce to support our operations in Mexico City, Villahermosa, our onshore treatment plant and offshore platforms.
The company is achieving its local content targets through a robust training program for the development of early-career talent, providing scholarships for young graduates in industry-specific master’s degrees, and by implementing strong knowledge-transfer programs. We have also established well-structured programs with the local Universities.
Annually, the company prepares a comprehensive training plan to ensure that the development strategy is updated and fit for purpose.
Q: What are the steps, including potential links to universities or educational facilities, that Eni is taking to promote the long-term improvement of skilled workers in Mexico, and what, if any, are the knowledge-gaps that the company has identified in Mexico’s workforce?
A: As part of our commitment to technology transfer and training activities, we have signed agreements with Mexican Universities and technology centers such as Universidad Autónoma de México (UNAM) and Instituto Mexicano del Petróleo (IMP) to carry out research and academic activities with highly skilled students, such as seminars in which our technical team has been able to share knowledge, experiences, and practices of the industry. Since collaboration with universities is considered one of the most effective ways to forge the leaders of tomorrow, we are planning to increase these collaboration agreements with other Universities in Tabasco, Veracruz and Tamaulipas.
Aligned with our corporate strategy, we have designed a master’s program where every year we select high-profile Mexican graduates to pursue a one to two-year master’s degree in some of the most prestigious Italian universities completely funded by Eni Mexico. To date, twelve young Mexicans have completed their master's degrees and eight more are currently pursuing their degrees.
With these agreements we promote training among young Mexican professionals. We also plan to increase collaboration agreements at a local level with other universities in Tabasco, Veracruz and Tamaulipas.
We have also launched a trainee program: we open some positions for Mexican young professionals to participate and collaborate in the core Blocks of our company. With these actions we actively promote the development of oil and gas professionals as valuable assets for both Mexican companies and International Oil Companies operating in Mexico.
Q: What is the long-term commitment that Eni hopes to make to Mexico and what is the role the company hopes to play in the administration’s 2024 production goal?
A: Our commitment to Mexico is long-term. Our production activities are supported and maintained by Production Sharing Contracts, which have a long-term view.
In Block 1, with the arrival of the FPSO at the end of this year and with the further project development in the coming years, we expect to progressively increase production from the present level to over 90 MBOED in few years in order to support in a tangible way the production goals of the current administration. In addition, we will continue with our exploration campaign with the hope to continue the discovery of new resources to be developed.
Furthermore, we hold participation in other five exploration Blocks. We are very proud to share that in Block 10, we have already made important discoveries, Sáasken in 2020 and Sayulita in 2021, respectively. These discoveries are expected to add to the country's production in the future and benefit future generations.
Eni’s global headquarters are located in Rome, Italy. Eni has been present in Mexico since 2006. In 2019, the company became the first international operator to produce oil offshore in Mexico since the introduction of the country’s new energy model.