Mexican Fleets Must be Renewed or Will Become Obsolete

Q: How have the main trends for maritime services in Mexico affected your performance over the past year?

A: The industry has changed. Traditionally, the offshore industry depended on PEMEX, but we will now have the opportunity to provide our services to private operators entering the Mexican market following Round One. Our focus is on seismic fleets, which carry marine seismic acquisition surveys below the seabed, using vessels towing a large array of seismic instruments. There are less than 70 vessels of this kind in the world, meaning that very few companies have provided these services in Mexico. As these services became more of a priority for PEMEX, competition began to arise, and companies such as CGG entered the market. Since then, CGG has been awarded contracts to acquire very large high-end seismic acquisition surveys in the Mexican waters of the Gulf of Mexico on behalf of PEMEX. To execute this project, CGG needed to change its Mexican fleet operator, which provided the opportunity for OH Maritime Services to start operating. OH Maritime had provided consultancy services but had never operated fleets before. When CGG invited us to participate in a private bidding, we presented the solutions it needed and were awarded part of its first WAZ project in Mexico, which involved ten vessels. Moreover, CGG recently created Seabed Geo Solutions, a JV with Fugro, broadening the scope of projects for us.

Q: What are the main differences between international and Mexican oil and gas maritime markets?

A: International practices for chartering contracts cannot be applied in Mexico due to PEMEX’s different regulatory requirements. International chartering formats are occasionally reviewed by technical committees, but their payment terms are very clear. With PEMEX, the first payment is made 90 days after the invoice is received, which is completely out of the ordinary. Internationally, if a company does not have a credit history with a ship owner, they will pay in advance. If these two parties have a longer relationship, credit may be extended for a maximum of 30 days, although seven days is more commonplace. Chartering vessels involves a high daily cost, which means that companies like ours face huge financial costs during the three months before PEMEX pays us.

Q: What new services can OH Maritime offer to the market ahead of the upcoming deepwater licensing phase?

A: We are currently participating in a couple of projects. In one of these, we provide bunkers to Mexican operators, essentially supplying marine diesel oil or intermediate fuel oil to vessels that operate here. We will continue to provide this service through a joint venture, named Maritime Fuel Supply. This year, we will bring in a new bunkering vessel that has a 2,000-tonne storage capacity, which is greater than any of our competitors in Mexico. The fleet that currently provides these bunkering services in Mexico is quite obsolete. Two Liberty vessels are still being used in Mexican waters, which were built in 1944 and were used to supply the Pacific front during World War II. These provide very slow service, small storage capacity, and a low pumping capacity. They are naturally far outside international safety requirements. If this situation remains the same, there will be problems when international operators enter the market. Since companies have vessels with enough capacity to avoid bunkering in Mexico, they could well choose to go to Panama or the US to refuel. Furthermore, the quality of oil products in Mexico is low, with high sulfur, heavy metal content, and a low flash point. Due to the Energy Reform, we will be able to start improving bunkering services in the country by improving the quality of oil products that will be sold in Mexico through imports. This will help the country meet international standards and comply with MARPOL Annex VI, which is part of a treaty that Mexico signed, allowing it to obtain ultra-low sulfur diesel for vessels in Mexico to decrease air pollution.

Q: What long-term trends will shape the Mexican maritime transportation industry?

A: Mexico has an obsolete fleet of over 25 years old with few new ships being built. However, the country used to be a market of operators, not of ship-owners, which is about to change. Fleets are now actively being updated and renewed, and certain suppliers have followed suit since PEMEX began this process. This is an area where OH Maritime wants to participate. If Mexican operators do not become ship-owners, the market will start passing them by as international oil companies will come in with their own fleets. After all, these companies will not hire antiquated vessels instead of using their own younger models.