Mexico's Call for Cooperation

Wed, 01/25/2012 - 14:21

“Mexico has to be more open to the idea of having more companies from abroad, whether they are Canadian, American, South American or European, because Pemex just has too many things to do,” says Guillermo Domínguez Vargas, Commissioner at the CNH and President of the Asociación de Ingenieros Petroleros de México (Mexican Association of Petroleum Engineers - AIPM). Many in the Mexican oil and gas industry agree with this opinion. Carlos Campos Echeverría, Managing Partner of BC Legal Consulting, is of the opinion that the years of monopoly in Mexico’s oil and gas industry have been the largest contributing factor to the lack of cooperation and development between the international oil and gas community and the Mexican sector. “We never created a national oil industry, because it was always just Pemex,” Campos Echeverría says. “Up until a few years ago, Pemex did everything; it drilled, manufactured pipelines, handled compression; it managed the entire process by itself. As a result, we never developed technology as other countries like Brazil did.”

As Pemex approaches technological challenges at its maturing fields and moves into new areas, the need for international cooperation becomes even more important, as without access to technology, exploiting deepwater and shale reserves will be a tricky prospect for the Mexican NOC. Domínguez Vargas of the AIPM says that the question of where Mexico needs technology most is an easy one to answer: “Deepwater is definitely the area where Pemex needs the most help from international partners. The NOC does have a little bit of knowledge in this area, but they will also need technology in mature fields and shale gas, as well as in enhanced oil recovery, not just in mature fields but also in fields like Ku-Maloob-Zaap.”

There are a number of dierent companies and associations that have recognized this need for international cooperation in the Mexican oil and gas industry, and that are taking steps to address the situation and attract foreign partners to Mexico. Amespac is an association dedicated to boosting national involvement in the Mexican oil and gas industry, but its Director, Eduardo Andrade Iturribarría, understands that national involvement does not just mean local companies, but also international companies that can establish a large presence in the Mexican market. As a result, the association also has international companies among its members. Amespac hopes that it can serve as a platform to help all types of companies develop their relationships with Pemex and other suppliers and service providers, and when needed, using the sway of larger companies to help the development of the Mexican service sector as a whole.

Domínguez Vargas of the AIPM believes that one of the best methods for bringing international technology to Mexico is through partnerships between foreign and domestic service companies. “Alliances can be good models for companies that enter foreign markets,” he says. “These companies can then make arrangements to bring in technology, whilst maintaining an element of national content, in order for Mexicans to play a part in the development of their industry, but also to teach them how to use the new technology and gain the knowledge that is required for the development of the industry. This is not something that is currently within the reach of the AIPM, but it is something that has been done by Pemex and the IMP, with support from the CNH.” Indeed, technology cooperation with international partners is one of the stated aims of the IMP, Pemex’s R&D arm.

The Colegio de Ingenieros Petroleros de México (Mexican College of Petroleum Engineers – CIPM), an institution mandated by the Mexican Constitution to ensure best practices in Mexican petroleum engineering, has also embarked upon a programme to bring international technology to the Mexican oil and gas industry, by focusing on alliances with academic institutions in other oil and gas producing countries. Gustavo Hernández García, President of the CIPM, explains that the institution has conducted a programme of visits to dierent institutions around the world, to raise awareness of the current technical and technological challenges that Pemex is currently facing, and those that they expect to face in the future, and identify potential areas of cooperation. “We have a very close relationship with the people in the area of technology and technical resources within Pemex, and with other associations. We are working with them in order to align the technological and technical needs that Pemex has with the oers and programmes for the professional development of the engineers currently enrolled in Pemex, IMP or CNH to propose them updated programmes of professional development aligned with the needs of the industry.”

It is not only institutions that are hoping to encourage the cooperation between Mexican and foreign companies and research institutions, but also consultancies like BC Legal Consulting, based in Veracruz. Managing Partner of the firm Carlos Campos Echeverría explains that the newly introduced integrated service contracts have the potential to act as a magnet for new companies looking to enter Mexico for the first time. He believes that the alliance model will be the best one to follow for a successful development of the industry. “The new business model will allow the national private sector to associate with mid-sized and large foreign companies in order to multiply talents and lend their services under a united front to those private developers that currently hold ownership of the oilfields,” he says. “This is the core of success of this reform that maybe wasn’t foreseeable, but the circumstances will facilitate the development of a new business model – not for the field developer, but for the hundreds of both national and foreign small, medium and large companies. The message we want to convey to the market is that the best way to do business in this industry under the new business model is by means of alliances.”

However, this desire for cooperation is not one that is shared by all members of the Mexican oil and gas community. Domínguez Vargas of the AIPM says frankly that “we are trying to be more open to the idea of international cooperation, but not all of our members agree with it. Some of our members have strong ties to history. Many of our members, some of them already retired, are against the integrated service contracts because they think that Pemex can do everything by itself, but I don’t think that’s the case.”