Investing for the Long Haul

Q: How will the cancellation of auctions affect the oil and gas industry?

A: In the short and midterm it will not have an impact because the awarded acreage for infrastructure and construction will be developed over the next five to six years. However, each year without new exploration acreage will have consequences in the long term. This cancellation will cause a hiatus at some point as the lack of exploration becomes apparent in around eight to 10 years.
Q: Why did Sapura come to Mexico and what are its main activities in the country?

A: The Mexican oil and gas industry has huge potential. This is why we are here and are investing in the country. We are working with PEMEX on the Line 16 project, which is a large 30-inch pipeline from the PP-Ayatsil-B platform to E-KU-A1 platform. For Eni, we are constructing an onshore pipeline, the shore approach and the offshore line. We have just finished the installation of an offshore well head platform, jacket and deck, which is a big milestone for ourselves and our client. The company is working hard to meet our client’s safety, budgetary and scheduling goals. Sapura has also mobilized its technical team from its international operations to mix with its Mexican workforce. This is a huge project with significant challenges but we are confident. 
Q: The Mexican government is pushing the role of local content in the industry. How is Mexico suited to meet this goal?

A: Mexico has fantastic knowledge of the shallow water market. It has an established supply chain. There are several local building yards with capacity to cover shallow water requirements and there are several service providers that have worked on these developments for a long time. The challenge, however, will be in deepwater. These fields will take between eight and 10 years to develop so the country must prepare both its human resources and its supply chain. 
Q: How is Mexico positioned to meet the human resources the market change demands?

A: Mexico has great professionals who have been working in the industry for many, many years. It is one of the larges shallow water oil producers in the world. The human resources basis in the sector is there. There are also many construction yards with well-trained workers. But PEMEX has been the single client for so long – for the lifetime of most of these workers – and meeting the standards of the new operators will be a challenge. There are new clients with different setup standards that need to be adapted to. Sapura has worked with many of these clients so we use our internal sources to fill the gap we have in Mexico while we train Mexican personnel at our projects abroad. In the last two years, we have sent people to Turkey, Malaysia, Brazil and other countries to get exposure to different clients, standards and projects. We like our personnel to be experienced in multiple environments. Our goal is to always have 10 to 15 percent of our Mexican workforce stationed abroad. About 70 percent of our personnel here are Mexicans. We feel this is a good percentage although our goal is to take that figure to 80 or 90 percent. 

Q: What is the main challenge the company has encountered in Mexico?

A: Working onshore is challenging. There have been security issues and disagreements with unions as well as route changes. There are many uncertainties when working onshore and the experience has taught Sapura many lessons. To achieve our onshore goals, we partnered with Arendal because we need a highly-experienced local engineering contractor. 
Q: What is Sapura hoping to accomplish this year?

A: We want to complete our projects safely, within budget and on schedule to achieve our clients’ goals. The company is also looking to win more jobs from both PEMEX and international operators. Our intention is to continue growing, increase our local content in Mexico and introduce our technology.

Sapura Energy is a Malaysian oil and gas service provider with a global reach. The company offers upstream services, including engineering, offshore drilling and E&P, to some of the world’s major oil companies.