New Marine Value ChainsTue, 01/21/2020 - 17:53
Q: How did you navigate the difficulties of Mexico’s maritime sector in 2018?
A: Our offshore fleets, like most in Mexico, were almost at a complete halt in 2018. The second half of the year was particularly tough for us. Most of the activity for service providers on the Mexican side of the Gulf of Mexico depends on PEMEX contracts and these reached an alltime low during this period, particularly in the areas of exploration surveys and construction of offshore facilities. This was partly due to public institutions and the market having to adjust during the transition period for the new administration and the uncertainty that it generated. With many of our activities on hold, we began exploring some possible collaborations with companies abroad. In 2018, we began operations in Houston with the intention of developing a clear vision through these collaborations and to survey what the market could look like in the near future. We believe these efforts have paid off as 2019 is turning out to be more resilient than 2018.
Q: What questions do these collaborators ask in regards to the future of Mexico’s oil and gas supply chains?
A: The questions I mostly get are related to politics: what this new president and his administration might be willing to do, or not, in regards to developing new supply chains. People want to know what the long-term strategy will be and what role are PEMEX and other public sector institutions playing in these development processes. I also get questions in regards to whether or not contracts that were awarded during the bidding rounds will be respected or modified. I basically answer that the country’s president cares very much about the oil and gas sector and therefore, we can expect him to take a beneficial approach to a policy that stimulates development processes. The people he is assigning key positions at relevant public institutions, such as SENER, are clearly still going through a learning curve, which presents its own series of challenges and opportunities. Most of the private operators that have CNH contracts from the bidding rounds are still going through the pre-operational phase. I tell everyone this means that we can expect industry activity to increase its degree of reactivation by the end of 2019 and throughout 2020.
Q: What are the main obstacles to the development of marine supply chains?
A: A significant obstacle to address going forward is that the communication between regulators and the private sector needs to be restored. Before the change of government, these regulators were struggling to grant licenses to import oil products like gasoline and diesel. The new administration is once again doing what it can to intervene in these processes because it wants to discourage, within the framework of the existing legislation, the establishment of privately-owned supply chains for gas and diesel. It intends to have at least some degree of participation in all the supply chains. Again, there are both opportunities and challenges here. The law allows PEMEX distributors to import their own products. PEMEX wants to make sure it can match the agreements that the private sector is making with foreign players. For example, if a company like Trafigura wants to make a deal with a medium-sized Mexican company regarding transportation price discounts, PEMEX would offer an equal or larger discount to make sure distribution is kept within its network. This model might present issues in the long-term but it is quite beneficial for local companies in the short-term.
Q: How do you stay afloat and overcome obstacles?
A: A few years ago, we were ahead of our competitors when we used the Lobos Tuxpan vessel for maritime supply, which was the first of its kind not operated by PEMEX. To use this vessel, we had to request all the necessary permits, and to our disappointment we experienced delays in obtaining these permits. As regulators, we are still figuring out what we did wrong with the permit solicitation process. We also experienced infrastructure-related issues. We wanted to close ties with PEMEX, but by using this particular infrastructure, we found that we were still tied to them. We are sure we will overcome these obstacles in the near future.
OH Maritime is an offshore business management and shipping agency. It represents foreign charterers, investors and ship owners in Mexico and is a consultancy for small, medium and large companies across a range of industries.