Q: IECESA made a choice to enter into alliances with Mexican companies while other companies have made strategic alliances with international companies. Why did you choose to cooperate with Mexican companies?
A: IECESA has had a long history of alliances with international companies. 18 years ago we entered into our first joint tender with a Norwegian company. Culturally, it was hard for us to understand each other. They have a certain way of doing business that differs from the Mexican way, a result of years spent partnering with our countries’ respective NOCs, Statoil and Pemex. In the end, the project was not successful; disagreements over pricing and tender terms simply made the collaboration too difficult. We found that it was much easier to partner with local companies that fully understood the complexity of doing business with Pemex.
However, our experience did not leave us closed to other opportunities, and since then we have explored other partnerships. Recently, we have been particularly focused on shipping, a new business area that IECESA is intent on developing. As a result of trying to enter this area, we soon realized that partnerships were the best way to move forward in this segment. Although we are open to international partnerships, we still believe that collaboration with Mexican companies is the easiest way for us to proceed.
Q: Pemex is now grouping more contracts together into integrated contracts. To what extent have you had to change your business model as a result?
A: Larger companies care more about the high-technology aspects of large projects, such as drilling; they don’t consider maintenance, installation and construction as that important. It’s not a big business for them, and so moving to a model where these companies are our main contractors has been something of a challenge. Currently, IECESA is subcontracted for certain services by companies such as Cotemar, Oceanografía and Diavaz, for example, rather than focusing on supplying services to Pemex directly. This is a very different world for our company, a world more oriented towards a corporate business style that entails greater legal commitments.
One of the biggest changes for us as a result of this has been our access to financing, which has changed a great deal as a result of moving away from contracting with Pemex. Now, it is much harder for us to find financing in Mexico without Pemex as a direct business partner.
Together with Grupo Evya we recently won a major contract to provide corrosion prevention, correction and protection services for offshore platforms, which also includes complementary maintenance work. Following a bad experience with the vessel Global Explorer in August 2005 (see box on page 159), contracted by Grupo EVYA and IECESA to facilitate the execution of a subsea pipeline contract for Pemex, we this time decided to acquire a vessel in China to carry out the new contract. It’s new for us to manage integrated contracts with a vessel.
Q: The technology and expertise that Pemex required to produce oil at Cantarell has evolved significantly since the field was first discovered. Now that the field is mature and has seen a rapid production decline, innovative technologies and solutions need to be applied. How is this affecting your business?
A: The area that we are focusing on, maintenance and construction, hasn ́t changed a great deal over the years. Pemex has developed technologies to handle mature and declining fields through very large contracts for nitrogen or water injection and other technologies. In our line of business, we supply equipment and services based on the individual tender. We have dedicated ourselves to providing that service for a while. The main difference that we are facing now is that Pemex used to issue individual tenders for services like food, lodging and transportation. Now, due to the integrated service contracts, these services are frequently bundled in large tenders. Pemex used to manage 200 tenders in the maintenance area, but now they are only managing three very big tenders and there are no more traditional individual contracts in the offshore maintenance business.
Because IECESA has been falling behind financially we cannot compete to handle this type of projects, although we do have the technological capabilities and experience required to participate in these projects.
We are already envisaging the needs of Pemex as it moves to deepwater, and hope to be able to make new alliances in order to offer services in this new environment. We imagine that these alliances will have to be made with international companies, from places like Norway and Brazil, who have experience of operating in these unique conditions: that experience is missing in Mexico.
Q: Over time, how has the maintenance philosophy of Pemex changed, and to what extent is the company now focused on preventative maintenance?
A: Unfortunately, even though Pemex says it has a preventative maintenance policy, this is not really the case – the NOC is still making repairs on a case-by-case basis. I think the main reason behind this is the allocation of the annual budget, which is more likely to be spent on exploration and new infrastructure development than preventative maintenance.
In certain areas, preventative maintenance does exist, for example in dynamic equipment, engines, turbines and generators. Here, Pemex has good preventative maintenance policies, because it knows that as a direct consequence of not providing preventative maintenance in these areas, production can be affected. However, in the remaining secondary installations, preventative maintenance doesn’t exist to the extent that it should.
Q: Has Pemex’s offshore safety philosophy followed the same development trend as its maintenance strategy in recent years?
A: Over the last five to six years, the safety question has become more important for Pemex. There used to be safety systems, such as fire protection systems, but there wasn’t as much emphasis on safety, including in terms of providing safety equipment to their personnel; you would often see people on the platform without helmets and boots. Some companies put more emphasis on providing safety equipment to their personnel, but it wasn’t one of Pemex’s policies. Now, there is a specific safety annex in all of Pemex’s contracts that is very complex and broad, with some very high fines for non-adherence. This new safety policy is a little overwhelming and drawn out, as Pemex is keen to show that it is doing all it can to adhere to these new guidelines.