Juan Carlos del Río González
Director General
View from the Top

Fiercer Competition Does Not Deter Local Engineering Firms

Wed, 01/21/2015 - 13:42

Q: How have the changes in PEMEX strategy and structure affected IECESA’s operations?

A: Recently, there has been a lot of focus on the drilling of new wells. We normally get involved in platform installation and focus on maintenance afterwards. We expect an increase in exploration activity, so platform installation is seen as our best opportunity. We are now trying to contact all the companies that are planning to enter the country to offer them our services. All these companies are perfectly capable of managing their core business but we can help them in all surrounding businesses based on our 20 years of experience in the industry. PEMEX’s changes have not had a major effect on subcontractors like IECESA. However, the large companies have had to adapt to the new schemes, especially those participating in the licensing rounds and tenders. Once they have obtained contracts, we will continue to act as suppliers and service providers for these projects. Our offshore activities are focused on working with six or seven large contractors, while our onshore activities focused on maintenance projects are facing more competition from smaller companies in this area. This competition has been restricted due to the new supplier database that PEMEX has created, but there are still a lot of participants. Each company has its own strategy, leading to fierce price competition. We have spent a lot of time and resources trying to compete in this market but we have had much more success with private companies.

Q: What role do you foresee for Ciudad del Carmen in the development of the offshore industry?

A: Ciudad del Carmen is, and will remain, PEMEX’s most important operating base for offshore activities. In terms of deepwater projects, Ciudad del Carmen might be overlooked in favor of Veracruz and Tampico. However, when it comes to shallow water projects, Ciudad del Carmen will continue to play an important role although there needs to be more space to support these new projects. Campeche has been growing, and with the proper investment, it might become an important port in the medium-term, which means that Ciudad del Carmen will continue to be a vital logistics and distribution port for the foreseeable future. After all, developing a new port with all necessary infrastructure in Ciudad del Carmen is not viable. Ciudad del Carmen will still be the main location for traditional operations.

Q: Given the recent PEMEX budget cut, what steps are you taking to succeed in this operating environment?

A: Thankfully, it has not been necessary to let anyone go, but if this situation were to last another three or four months, we might have to consider that possibility. At the moment, there has been just enough work to maintain our operative base. We are trying to maintain a balanced budget by keeping costs at a minimum and reducing our revenue margin. There are many different forecasts out there but I think the entire year is going to be really slow. Hopefully, everything will pick up next year.