Américo Arujo
Director of Operations
PM Offshore
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View from the Top

Expanding Vessels in Bay of Campeche

Wed, 01/22/2014 - 16:02

Q: Which opportunities led to the creation of PM Offshore?

A: Every time a drilling platform arrives, a raft of opportunities opens up, since that arrival brings in demand for passenger vessels, cargo vessels, towing vessels, and other types of ships. For every platform that is going to arrive, we calculate the need for vessels will continue to increase, and we are betting our growth on such offshore services. PM Offshore has been operating for around three years as a subcontractor and we work under long-term contracts with service providers. We have just received three vessels from the US, so our next step is to properly develop the maritime side of our business and get started with the provision of drilling services. Most importantly, we need to work with our contractors in order to create alliances with platforms.

Q: What are the main criteria you apply to the process of selecting partners or clients?

A: Everyone knows each other in Ciudad del Carmen, so our first criteria is how serious the company is. We happily work under contract for Halliburton, Schlumberger, Subsea 7, Cotemar, Blue Marine, and other companies of this type and size because we know they have the necessary capital. They are serious, and we can work for them knowing exactly what we stand to win, how much we must spend, and that the flow of business will be continuous. We have always had solid alliances, especially with Italian and Canadian vessels, as well as with Goimar and Pacific Richfield Marine.

Q: What criteria guide your fleet development and maintenance strategies?

A: We choose vessels with a significantly higher capacity and tonnage than those traditionally used around Ciudad del Carmen. We have the capacity to move 60 to 80 passengers in our vessels at a higher speed and with less fuel consumption. Our competitive advantages are capacity, speed, and low fuel usage, which translate into a significantly cheaper option for our client. Our price depends on the amount of time stipulated by the contracts and on the type of work being done under said contract. There are companies who ask for a vessel for seven days and only for the transportation of water and diesel, others leave you waiting in the harbor for two days, and others need you to do two or three trips every day. We calculate our price based on these factors, since making two or three trips a day to the basin at 20 knots causes a higher degree of vessel wear and tear. These are all perfectly normal criteria for us to decide whether to accept or reject a client. All our vessels are classified according to type and are up to speed concerning all quality and safety certifications. They are all fully insured and our insurers ask us to be completely certified and to maintain our certifications up-to-date at all times. We are currently working towards getting an ISO:9000 certification, given that our fleet already has all the other certifications necessary to work with PEMEX. Our vessel maintenance is also first rate as failing that, we would not be able to work properly in this market. When selecting new vessels, we tend to select vessels that use machinery and components which are similar or compatible with those in vessels we already possess. That way, we can buy a stock of components and replacements that we can use interchangeably throughout our fleet. This helps us bet on preventive rather than corrective maintenance.

Q: What will be the main drivers of your future growth?

A: The market that has anchored our growth is the transportation of personnel and of light materials, and we are foreseeing a sharp increase in both of these areas. Clients are calling more frequently and have occasionally become insistent as their need for vessels becomes more urgent by the day. This market is in a good place, this rhythm will probably keep going for another three years before we see a rise in another type of demand. The main driver behind all this activity is the constant arrival of drilling rigs, which attract towing vessels, passenger vessels and so forth. PM Offshore can satisfy all these needs so every drilling platform is like a present for us. We also pay very close attention to the companies that are competing for PEMEX contracts. We constantly research all bidding rounds, and based on who we believe will win, we determine the precise nature of their needs down to the last cubic feet of vessel capacity. We occasionally take too much risk, but that is part of learning as much about the market as we can. Buying an inadequate vessel would see us lose some of our working capacity so many factors influence that decision. For instance, we use the port of Ciudad del Carmen as a reference when determining the right size for a vessel. A vessel that is too big will be inoperable, since it might not fit within the port’s infrastructure. We are on the lookout for port expansions when determining our business strategy. Some of these expansions have been in the pipeline for a long time but they involve major conflicts of interests. Building a 16ft canal in Ciudad del Carmen could potentially deal a body blow to Dos Bocas, for example. At the same time, the proximity of Ciudad del Carmen to the Campeche Basin means that any port expansion would result in a threefold profit increase for administrators and authorities.

Q: What are your plans for expansion beyond Ciudad del Carmen?

A: We would like to expand to the US as we already have an affiliate over there. The main advantage of such a move would be having our vessels sailing under the American flag as this lets you sail with less paperwork. The minimum crew size over there is four: the captain, an officer, and two sailors. Here, you need six: a captain, an officer, two sailors, a machine chief, and a machine admiral. This means expenses in Mexico are much higher than in the US. Since the crew’s salary is more or less the same in both countries, the profit margin is significantly higher in the US.