Mexico’s Less Identified Upstream Opportunities
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Mexico’s Less Identified Upstream Opportunities

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Pol Palacios - XWELLS
Chairman, CEO and Co-Founder


Q: What missing elements in the industry did the creation of XWELLS address?

A: My original area of expertise as a petroleum engineer is deepwater technology. This includes drilling and completion. My profile in the field became quite significant during my work as one of the pioneers on key deepwater projects in Africa. I did much of this work for Total, which played a historic role in the development of deepwater operations in Angola and Nigeria in the 1990s. During this time, Brazil was the deepwater leader in Latin America. Many new technologies and methods were developed during this period, which was the start of my career in deepwater subsea operations engineering for major operators. This is also true for the other founders of XWELLS; this is where we all came from, one way or another.

In 2014, when oil was priced above US$100 and everybody thought that this would continue to be the case for many years to come, we all realized that a major change was about to take place in the industry. We recognized that environmental pressures would continue to increase but we also understood that demand was not necessarily going to follow the gradual descent that everybody was expecting it to.   

This is when we became aware that the industry was faced with three central issues. One was an issue of technology. Witnessing the rapid developments of deepwater technology during the ‘90s made us notice that this progress had slowed down at some point and that major operators were driven more by the stock exchange than by innovation. President López Obrador has famously said that PEMEX got out of deepwater projects because it was too complicated and expensive and also because it took too long to become productive. We believe that those are technological challenges, not inevitable circumstances. We believe technology can help push deepwater development more quickly and cheaply into productive phases.

The second issue has to do with human resources and management. We noticed that big oil companies have lost their path in terms of training local workforces and developing local talent. However, in countries such as Mexico, you could argue that there are enough engineers and technical experts to develop the industry on their own. This points to the third issue. What was needed here from IOCs and other oil companies was money, so the industry also suffered from resource allocation, distribution and management.

XWELLS aims to address these three issues. Mexico represents a wealth of opportunities in a context that is much more developed than what we have seen in other countries. We support new players, while operating on behalf of entities who require our expertise. For instance, we worked in the design of drilling projects for Wintershall DEA. Our broader long-term ambition is to create deep connections in the oil and gas business between Latin America, the UK and Africa.   

Q: What are the most important opportunities that Mexico presents for your company?

A: Our Mexico division is actually larger than our headquarters in Scotland. Mexico is one of the few countries in which we see a real structural potential for growth in the energy sector. There is much to be done to generate greater revenue and there is more openness to foreign investment than perceived.

There are three developments that I am paying close attention to. One is the lack of upstream financing for exploration and drilling. Because of the new energy transition measures, Houston, New York and London do not have the cash available for these activities. We see opportunities in Mexico to help clients find these financial streams. We also see opportunities in working with financiers willing to invest in oil and gas but who might not have been introduced to the dynamics of the industry. For example, we work with a Mexican bank that owns oil and gas assets, including an offshore drilling platform that is operated by a separate technical consortium. The bank requires the continuous support of a technical advisor to monitor their investment in the energy sector.

The second development concerns the needs of construction and engineering service companies in Tampico. For the past 30 years, these companies had PEMEX as their only customer. We want to help those companies compete in international markets. For example, we are helping a Mexican EPC company tender for a project in Libya. In general, we want Mexico to become a little bit more like Singapore, where companies are always looking outside their country for work.

The third development concerns the opportunities that we see in Mexico for carbon dioxide capture and underground storage. As more carbon caps are established in the US market, Mexican companies will need to become competitive in this category as well.      

Q: What are your growth and development targets in the country?

A: We would like to continue replicating in Mexico what we already do as a service provider to financial institutions in other parts of the world. We can help them reduce their risk and exposure while maximizing the benefits for them in the oil and gas sector. We also want to look for opportunities in hydrogen production through natural gas and other power sourcing in Mexico.


XWELLS is an upstream consulting and investment firm focused on the development of innovative technologies and new project methodologies. It is based in the UK and focuses on international interests in Mexico, Central America, Angola, Congo, Morocco, Colombia and Indonesia.

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