The Moment Is Right For FPSOs In Mexico
STORY INLINE POST
Q: What projects and opportunities originally attracted Yinson to Mexico’s oil and gas industry?
A: We became interested in Mexico after the enactment of the Energy Reform in 2014. The enormously wealthy blocks that had been offered in the Gulf of Mexico immediately sparked our interest to become a prominent provider of FPSOs for operators. Yinson understood from the very start that FPSOs represented a great and cost-effective solution for many of the logistical issues that operators would face when dealing with Mexico’s existing offshore infrastructure. However, we did not get involved until we saw companies such as ENI, Shell and Equinor begin to invest great sums of money into the procurement and development of these blocks.
In 2017, we entered a bidding tender for the supply of an FPSO for ENI’s shallow water blocks in Mexico. We came in second place after MODEC, whose vessel is in the final construction stages and will likely begin operations in Mexico during the second half of 2021 or the beginning of 2022. Throughout that process, we acquired experience working in Mexico’s local market.
Q: What were some of the most important items on your agenda when you joined Yinson a few months ago?
A: I joined Yinson because the company is aware that in all Latin American markets, despite COVID-19, you need a person on-site who can meet with clients and regulators to oversee the company’s agenda. This was at the top of my to-do list: Ensure Yinson gained a greater physical presence in Mexico. It also led us to secondary conversations with other customers and clients regarding the need for FPSOs in two to three years. Some of these clients are already working on exploration permits granted by CNH. We need to make ourselves as available to these companies as possible while also searching for new opportunities with companies that have yet to receive authorization to launch their exploration campaigns.
I have also been in close contact with PEMEX, particularly PEP (PEMEX Exploration & Production). The intention is to present PEP with some feasible and viable solutions to the current existing problems in their offshore wells, where they are dealing with an excess of water, salt and hydrogen sulfide. We are trying to offer them solutions to mitigate the problems that these issues have created. We are also in contact with other entities such as AMEXHI, CNH and Sener so that we can remain up to date on a day-to-day basis regarding all developments in the industry.
Q: What are the advantages of FPSOs?
A: The events of 2020 have forced companies like Yinson to diversify their commercial strategies. This means we now offer more attractive long-term leasing contracts to our clients, sharing responsibilities, risks and penalties with private companies in order to work more as a team. This has allowed us to provide our clients with some reassurance, both from a technical and from a commercial standpoint. This modality seeks to create long-term relationships between us and our clients and, in the process, make FPSOs more attractive as an option.
We also feel that the Mexican oil and gas industry has become increasingly receptive to the way in which we have presented the advantages of FPSOs: They eliminate the need for costly long-distance oil pipelines to an onshore terminal; the FPSO concept is often the preferred solution in remote and deepwater areas, because it is more cost-efficient than a platform plus FSO or platform plus pipeline concept; in areas prone to heavy weather, such as hurricanes and cyclones, FPSOs can be designed with the ability to disconnect from the subsea infrastructure, sail away from the storm’s path and reconnect when the storm has passed, increasing safety but also limiting downtime; finally, upon field depletion, FPSOs can be relocated. These are all great advantages over fixed installations.
Yinson started as a Malaysian transport and logistics company and became an oil and gas player through its transformation into Yinson Holdings Berhad and acquisition of Fred Olsen Production, one of the world's leading Floating, Production, Storage and Offloading (FPSO) service providers.