News Article

Highlights of The Mexico Oil & Gas Summit 2014

Wed, 06/04/2014 - 12:40

Arturo Henriquez, Chief Procurement Officer of PEMEX, spoke about the importance of the new centralized procurement function at PEMEX; the importance of this new office is such that its consolidation process has been accelerated to match the passing of the Secondary Laws. US$120 billion is produced by PEMEX every year and this is expected to increase steadily with the new reforms. The vast infrastructure involved in its operations makes PEMEX a national heavyweight; this infrastructure includes six refineries, eight petrochemical complexes, 60,000 km of pipelines, storage units, cars, roads, tractors, hospitals, and more. The procurement division of PEMEX is also a force to be reckoned with; its operations involve anywhere from US$20 to US$30 billion a year, and 20,000 contracts. There are 100 contracting offices and more than 3,000 employees dedicated to procurement at PEMEX. This has been taking place in a very decentralized and unstructured environment. Last year, PEMEX visited global oil companies to study their procurement divisions, as well as getting advice from international consultants. Henriquez explained that PEMEX wants to create a unified procurement division which results in centralized planning. Most major oil companies are working on a centralized or hybrid-centralized procurement model today, and PEMEX intends to follow this.

Centralizing the procurement role and having a Chief Procurement Office that will report directly to the CEO gives procurement the importance it has always had from a strategic standpoint. PEMEX is going to be conducting strategic sourcing through category management. Category management means taking a step back and analyzing purchasing needs through spend analysis, rather than taking a needs-based reactive approach. Spending is identified, categorized, and sub-categorized. The hope is that this will make PEMEX procurement officers specialists in their fields.

Henriquez explained that the other pillars of the procurement department overhaul will be integrated shared services, strategic sourcing, technology and human capital development. In terms of the last and much discussed point, human capital development, Henriquez explained that in terms of procurement the focus will be on making current specialized employees generalists, and then specialists in procurement. Further procurement employees need to be experts in what PEMEX buys while also understanding the technical, legal, and commercial aspects of procurement.

Henriquez concluded by admitting that, historically, doing business with PEMEX has been very challenging for suppliers because of its bureaucratic nature, but that the implementation of international best practices on three main subjects (strategy, suppliers, and procurement) aims to resolve this.