Mexico’s Hydrocarbon FundTue, 01/22/2013 - 13:37
Pemex uses its Strategic Technology Plan as a roadmap for the development of innovative technologies that can help address current and future challenges across its exploration, development, production, refining, and petrochemical activities. “All projects developed for Pemex must be aligned with the Strategic Technology Plan,” explains Francisco Gabelich, Director General of Ciateq, one of Mexico’s basic research institutes with extensive oil and gas industry related capabilities.
In order to achieve the objectives set forth in the Strategic Technology Plan, Pemex can utilize the financial resources of a sectorial research fund, the ConacytSener-Hydrocarbons fund, which was created jointly by Conacyt and Mexico’s Energy Ministry, to facilitate new technology development through investments outside the budget allocated to Pemex by the Federal Government. “Technology and innovation projects are published and tendered in packages, and companies and institutions submit their project proposals, which are then reviewed by a committee formed by the Energy Ministry, Conacyt, and Pemex representatives,” Gabelich explains.
The beginnings of the Conacyt-Sener-Hydrocarbons fund date back to October 2007, when Conacyt and Pemex started collaborating to create a framework for new technology development to face the modern challenges of the industry, under the governing taxation policies of the Finance Ministry and the Federal Administration. It was established that 0.65% of the fiscal proceeds from Pemex E&P would be made available for technology and scientific research projects. From that allotment, 63% would be directed to create, and further replenish, a fund dedicated to addressing the research needs of the hydrocarbons industry. The available financial resources are expected to increase each year, in line with the revenue of Pemex E&P.
The fund, which currently has more than US$700 million in its coers, was established to finance technology development with the assistance of universities, research centers and laboratories, and public and private companies. Since the fund is aligned to Pemex’s Strategic Technology Plan, it is focusing its research funding strategy on the technological requirements for deepwater activities and shale gas and oil exploration. “Deepwater and shale gas are issues of great relevance for the Mexican oil and gas industry,” states Gabelich. “Mexico is getting ready to conduct several projects in these areas, and the ConacytSener-Hydrocarbons fund will play an important role in financing these activities.” Pemex, Mexican Petroleum Institute (IMP), and Comesa are already cooperating to acquire seismic information for areas where prospective shale resources are expected to be found.
Pemex has identified a prospective shale gas area of 43,000 km2 and is considering conducting seismic surveys in an area of 10,320 km2. To speed up the evaluation of resources in key prospective blocks in Galaxia, Burgos, Limonaria, and Tampico-Misantla basins, the Conacyt-Sener-Hydrocarbons fund is financing a project for the acquisition and analysis of seismic data covering 2,700 km2. This project, called “Assimilation and Technology Development in Design, Acquisition, Processing and Interpretation of 3D Seismic Data with a Focus on Shale Oil and Gas Plays in Mexico” was approved during October 2012, and is coordinated by the IMP.
Ciateq’s Director General believes that Mexico is still in learning stages of developing an adequate research environment for the industry, but he is convinced that the introduction of the fund has certainly improved the outlook for research, development, and innovation projects in the oil and gas industry. “Through the Conacyt-SenerHydrocarbons fund, the government has made important strides in persuading Mexican companies to invest in innovation and technology development,” Gabelich comments.
Now that the financial resources are in place, the focus is shifting to correctly managing those resources. “The legal reforms in Mexico in 2006 and 2008 encouraged the allocation of prominent investments to research and development,” states Vinicio Suro Pérez, Director General of IMP. “What we need today is to form new research groups to address the industry’s current challenges and problems and complement Mexico’s current scientific capacity. It is not only an issue of money; it is the focus given to that money and the way it is managed to address the right problems at the right time and with the right people.” Strengthening Pemex’s ability to prevent brain drain, bring talents back to the country and provide them with challenging tasks that can help foster the development of the national oil and gas industry will be an important success factor in this process. “We have over 100 people studying postgraduate specialties abroad,” says Fluvio Ruiz Alarcón, one of Pemex’s Professional Board Members. “The issue is bringing them back and assigning them responsibilities that can keep them motivated, and encouraging them to improve the country’s technological and operational expertise.”
“If you measure the budget allocated to exploration and engineering activities in nominal terms, the investment in research and development has been growing, helped by the additional resources provided by the hydrocarbon fund,” Ruiz Alarcón explains. “The fund’s contribution is still in its early stages, but it has started to yield clear results.”