César García Brena
Partner
Bremass Energy Advisors
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Kickstarting a Cultural Revolution in PEMEX

Wed, 01/22/2014 - 17:33

Q: What were the main opportunities that led to the creation of Bremass Energy Advisors’ consulting practice for the energy sector?

A: Bremass Energy Advisors saw a large business opportunity with PEMEX for two main reasons: its cultural transformation and addressing the new challenges to come. The easy oil era is long gone and the new challenges that PEMEX is facing include complex, long-term, multidisciplinary projects that will require considerable collaboration efforts. This is where our company comes in. Bremass Energy Advisors has experience working with IOCs in developing strategies to make exploration, development, and production projects more efficient. We believe we are kick-starting a cultural revolution at PEMEX. Bremass is changing the way the company works by making its operations more transparent, easing its workload, and making its decision-making processes more streamlined, fact-based, and collaboration-oriented. PEMEX has great people, but a common problem emerges as talented engineers move up the corporate ladder to deal with excessive bureaucratic requirements that prevent them from developing the managerial skills that are required to take the firm to a new level. This is an area in which Bremass Energy Advisors is helping PEMEX, getting it to rethink the way in which it develops and manages complex projects.

Q: What have been your most significant projects in the last years?

A: Bremass Energy Advisors started its operation by developing the financial model for the Electrical Submersible Pumping (ESP) project for the KMZ field. This project is worth over US$1 billion in investment, and we were approached to heal its finances and develop a model to help its managers understand their options. We also worked for the Abkatún-Pol-Chuc field in enhancing the decision-making process and ramping up production numbers. Our company arrived there three years ago, when the field was producing 260,000b/d. Today it is producing over 300,000b/d. One interesting development we achieved is that the staff is now going home earlier, having more peace of mind as they have more control of their operations. We also developed a methodology called Asset Management System (SIGA™), aimed at streamlining decision-making processes and increasing the simplicity of looking at all activities within the asset. Previously, decisionmaking processes were rather messy and crowded: around 20 engineers would meet in a room and open suitcases packed with documents and data just in case they needed them. They used to go home at midnight, unsatisfied for not reaching an agreement. Now we have streamlined the process and the team is ready to make needed decisions at the right time. Most importantly, PEMEX now manages activities, projects, information, and resources in a more orderly and agile way, all thanks to SIGA™. This has resulted in Bremass expanding its reach and starting to implement SIGA™ at KMZ. This methodology is now being put to use in two out of the three largest fields in Mexico.

Q: How could clearly defined career paths help PEMEX take advantage of its human capital?

A: PEMEX has a large number of great engineers who know a lot about the fields. Based on their performance, they are promoted to managerial positions where they are overwhelmed by bureaucracy and often tend to micromanage, getting too involved in the details. I have seen regional sub-directors making decisions on whether a well should be intervened and at what intervals. These are technical decisions that should be made by field engineers with the approval of the asset director. Bremass Energy Advisors’ philosophy is based on the principle that every manager should have a set domain of levers and indicators. Our company is permeating PEMEX’s corporate culture all the way down, not only by helping decision-makers improve their performance, but also teaching management skills to people in lower ranks for when they move up the corporate ladder. We are teaching people in those positions about management tools such as what key performance indicators are, how they should be used, how they relate to the company’s strategy, how to make a strategic planning at their level, and how to use technology and decision-making systems. This could prove to be a revolution for PEMEX, since all the staff at every level could improve their management skills. We also help supervisors and operators understand the consequences of their actions. For example, we provide many mid-level managers with a peek on how top-level decisions are made, helping them see how their performance affects the company. This program also aims to make PEMEX adopt meritocratic measures for their employees. Previously, managerial competences and abilities were not seen as a key skill in PEMEX’s assessment of professional skills. Bremass Energy Advisors looks to change this mindset.

Q: Which changes do you implement on a bottom-up basis, and which require a top-down approach?

A: Bremass Energy Advisors helps asset administrators manage their time and change the culture towards accountability, transparency, collaboration, and simplicity. One of our clients that implemented SIGA™ used to spend a lot of time putting out fires instead of solving strategic challenges. We turned that around by streamlining their decision-making process, helping them improve project tracking, and implementing tools to simplify their complex projects. After addressing senior management’s decisionmaking system, middle management is eager to follow the same advice since they see adequate results. When people see efficiency and the possibility of making their work easier, they ask for those solutions to be implemented. That is our company’s approach when working top-down. We also follow a bottom-up approach. By bringing back retired engineers, Bremass helps top managers understand the challenges at the platform and rig level. These are issues that current employees do not even dare to mention in meetings. On the other hand, retirees have absolute freedom to speak and are not afraid about raising their voices to utter the concerns.

Q: With new companies entering the country, how can Bremass Energy Advisors help PEMEX devise strategies to retain its staff and attract professionals?

A: Much of this problem relates to the competency model that PEMEX has tried to implement. It has not yet done so on a broad level. PEMEX has to be more aggressive when it comes to HR management. For instance, it has to find ways to retain its engineers, creating incentives such as semiretirement schemes in which older staff can come back to the company to teach new generations. As you know, there is a worldwide generation gap in the oil industry. This is a particular challenge for PEMEX as a large cohort of great engineers will be retiring within the next five years. In general, Mexico has a shortage of oil and gas professionals, and yet there is a certain taboo regarding hiring foreign professionals that could bring skills and experience to the country. PEMEX would save resources if it had a more flexible stance towards hiring foreign talent, instead of paying astronomical fees for their work through third parties. Foreign engineers could also help train young Mexicans and develop local talent. The second step would consist of developing a comprehensive and aggressive HR plan to identify young talents, fast-track their development, create a pool of retired employees who will help the younger workers, and be more aggressive in competence development. PEMEX should favor legitimate business approaches, not nationalistic ones.

Q: What is the importance of Bremass Energy Advisors’ alliances with universities?

A: More engineers have graduated in Mexico over the past years than in other engineering powerhouses like Germany. However, not all of them are specialized in petroleumrelated careers. The whole educational system has to be more aggressive in promoting careers related to this industry. I have seen a lot of small universities sprouting in the southwest and pushing petroleum engineering degrees, mainly in Tabasco and Campeche. This is not enough, both the government and the private sector should take hold of this opportunity. I cannot explain why major universities have not yet expanded their offer of oil and gas-related engineering degrees in southwestern Mexico. Newer generations see the oil industry as dirty or outdated. This is a misconception, since this industry will continue to play a prominent role in the future. It will offer great career development paths and opportunities for young people.

On our side, Bremass is committed with the development of Mexican talent. While PEMEX should be more flexible in attracting foreign professionals, the key to enhancing its competitiveness and performance is developing strong Mexican talent. We promote this objective by having agreements with universities to take interns and trainees and have them work with us for months at a time. We hire many young engineers fresh out of college and explain to them that consulting can also be a great career path for petroleum engineers. Most of them hope to go out to the fields as soon as graduate, but we tell them that consulting will enable them to partake in the decision-making process.

Q: Which role do you envision Bremass Energy Advisors could have in this reform process for the industry?

A: I see two main roles in the firm’s future. First, we will continue helping in PEMEX’s cultural transformation by giving the company more tools to become a competitive player. This will be done both by implementing management systems, tools, and methodologies to boost PEMEX’s overall efficiency, as well as by teaching its employees how to use them and take advantage of them in their work. Our second role will be to help international players, operators or service providers, to successfully come to Mexico, partner with PEMEX, and navigate the cultural differences. Any operator that comes to Mexico will need to understand the unique culture of PEMEX. If not, problems and miscommunication will arise in the fields and at the mid-managerial level.