Laboratory Services at the Industry's Front DoorWed, 01/20/2016 - 14:10
Q: How are you managing to maintain your relationship with PEMEX in the current environment?
A: I have been involved with PEMEX since 1978, and I have never experienced a situation as critical as that in which the NOC finds itself at the moment. The main problem we are seeing is the delay that can last up to several months in terms of billing for services, and now the payment conditions have been changed for a period of up to 180 days, which essentially means that the suppliers and service providers must finance PEMEX over this time. The costs of factoring are relatively high, so this has been a particularly problematic situation for our company. On the other hand, we have a contract with PEMEX E&P, which is also available for use by production assets, providing rock analysis for PEMEX interests across the breadth of the country. The project is running slowly, mainly due to PEMEX’s current low levels of activity and the lack of wells that are providing samples for analysis.
Q: What will be the implications of the fact that PEMEX returned 95 wells to the authorities for Petricore?
A: Firstly, there will be a lack of productivity due to decreased PEMEX activities in the country. Presumably, the reason for the return is the fact that these fields are not overly attractive to PEMEX, meaning their appeal for private players in the case of new bidding rounds may be limited. However, the principal reason for the return of the fields is PEMEX’s lack of resources, meaning that the fields are not necessarily unattractive, but that the NOC simply does not have the resources to establish effective operations. The whole sedimentary base of the Gulf of Mexico, from Florida to Campeche holds a wealth of opportunity for hydrocarbon exploration. Moreover, it is likely that the south side of the Gulf has been exploited to a much lesser extent than the north due to intense activities in US offshore drilling practices, meaning that new players should not make the mistake of underestimating the potential of these fields. There are certainly conventional fields awaiting discovery and, although I do not anticipate we will discover any more behemoths like Cantarell, the unconventional and shale sources are relatively underdeveloped, especially compared with the US side. Due to geological similarities in the sediments, these resources could prove just as fruitful as those already extracted in the US, although I believe we are still a long way away from seeing major shale development in Mexico.
Q: How is Peticore benefiting from an environment in which companies look for low-cost, integrated services?
A: Offering both well services and rock analysis gives us a particular benefit since the services are intrinsically linked. In the future, our regional, geological knowledge, a consequence of our range of services, will be our main competitive advantage in the emerging market, as our competitors lack the experience in Mexico that we have. In the specific case of Mexico, we have a full-service laboratory established in the region where most activity is seen, whereas most competitors do not have the same facilities, and their local provisions are limited. They then tend to send samples back to their main laboratory, which is normally located in Houston, Texas, or Aberdeen, Scotland, and there tends to be a long waiting list for analysis due to the fact that the laboratory acts as a global hub for the company. However, we have a lab dedicated to the sample analysis here in the heart of the oil community, exclusively for the Mexican oil market, meaning that we can provide the results much quicker.
Q: How do you plan to demonstrate your capabilities to IOCs that are expected to enter the market?
A: We have invested in marketing in order to increase visibility and make the oil community aware of our presence on a global level. Timeliness is crucial in this industry as many operations are time sensitive, and the data must be provided as quickly as possible so that companies can quantify reserves and determine production methods. Moreover, this business has a reputation for its delays, so at Petricore we are very much focusing on the speed at which we can deliver our services, while maintaining quality. Competitors have always seen establishing a laboratory in Mexico as a highly risky venture, due to a high investment requirement and relatively few contracts. In this way, we have gotten a head start, and will be well-positioned to offer our unique local knowledge to any companies entering the new landscape.