Fresh Advice Needed for Reshaped MarketMon, 09/01/2014 - 12:45
Booz & Company, a firm with a long history in strategy consulting has joined forces with PwC’s advisory business to deliver an end-to-end solution from strategy to execution. As part of the merger, Booz & Company is now renamed Strategy& symbolizing the greater impact that the firm will be able to have on its clients’ operations by leveraging the implementation capabilities that PwC has become known for. Before joining the PwC network, Booz & Company had been growing at a steady 9% per year and had revenues of about US$1.3 billion, which were primarily derived from strategy-based transformations. “Booz & Company decided to do a strategy analysis project on itself to understand how the market was changing and adapt its strategy to grow faster. It found a partner in PwC that shared its desire to grow and believed in the strategic conclusions that the former had taken from its analyses,” says Juan Trebino, Strategy& Leader for the Energy, Chemical & Utilities Practice for Spanish-speaking Latin America. “Now, as the two firms have combined their efforts, Strategy& and PwC’s advisory business amount to a US$10 billion enterprise that will be offering its wealth array of experiences and knowledge to the Mexican oil and gas industry.”
Strategy&, under the Booz & Company name, has already been in Mexico for over 40 years and PwC has operated in the country for more than a century. “Having worked on other reforms in countries such as Colombia, Brazil, Argentina, Norway, Malaysia, Africa, and the Middle East, Strategy& has accumulated extensive experience in the process and challenges of energy reforms. These experiences will serve as a backbone to help us support Mexico’s oil and gas industry players. We were very present in the opening of the Brazilian energy sector, where we helped Petrobras, other companies, and newly formed government agencies define operational models according to the new regulatory framework,” Trebino recounts. “Similarly, we were also present during Colombia’s transformation of the energy sector by working closely with Ecopetrol and new players. By having such experience in Latin American markets, we are sure that we have the intellectual capital to support PEMEX in preparing to compete in the market and, at the same time, to help SENER and CNH leverage that know-how in order to avoid pitfalls that have occurred in other parts of the world.”
“Looking at experiences in other geographies, we consider that there are a series of important elements that will define the success of the Energy Reform in Mexico,” says Alejandro Vanags, Strategy& Principal for the Energy Practice. “Having a new fiscal regime that includes a variety of contract protocols, including profit-sharing agreements, production-sharing agreements, licenses, and service contracts, will enable regulators to apply the right type of regime to the different fields and plays in order develop the country’s resources in an optimal way. However, there must be a clear definition of the roles, responsibilities, and interaction between the executive and regulatory government entities, PEMEX, and the new participants,” he urges. “A set of local content rules that gradually increases demand for local vendors and talent combined with a comprehensive program to develop supply for the Mexican oil and gas industry will be needed.” Vanags finishes by saying that people have to understand the timeframe of a reform process. “Reforms are processes that typically span decades rather than just being a milestone. Thus, they require mechanisms to gather participant feedback and to make adjustments to the laws and regulations as the market matures,” he states.
Regarding the scope of the Energy Reform, Trebino highlights that the level of flexibility and openness of the current legislation was a positive surprise. The aggressive approach to change the industry’s parameters is something that Strategy& believes will bring great demand for its services. “We will definitely see plenty of interest for our strategy development and implementation models in the deepwater and unconventional segments,” he says. “We know that, in order for Mexico’s national oil company to flourish, it must leverage the experience and financial capability of international players.” Trebino explains that new companies must complement PEMEX by making use of its local subsurface knowledge and asset positions. Moreover, he urges that it is absolutely necessary for rules and regulations to be as transparent as possible in clarifying the roles and responsibilities of each of the players in the market. “CNH as an independent regulatory agency must understand that it is meant to be apolitical,” he states. Guillermo Pineda, PwC Energy Leader for Mexico, affirms the importance for PwC Mexico to welcome the expertise and talent pool of Strategy&, and looks forward to the challenge of jointly supporting Mexico through its Energy Reform.