Wajih Effendi
Vice President and Country Manager
BG Group
View from the Top

Nimble E&P Experts See Mexico as the Future

Wed, 01/21/2015 - 12:32

Q: Which role could Mexico play in BG Group’s reserves replacement strategy?

A: Mexico could become another leading part of our portfolio. BG Group sees Mexico as a solid economy and a great hydrocarbon basin to be working in. In a lot of countries, the first question is whether there are hydrocarbons or not. In Mexico, we already know there are. We have been waiting for the Energy Reform, but it is a bit soon to say whether we are going to be focused on deepwater, shallow water, onshore, or other areas. We are going to look at all opportunities.

Q: What makes Mexico a competitive upstream investment destination in BG Group’s global portfolio?

A: We look at opportunities in a global context. Mexico has to be compared against all the countries where we operate today, as well as all the potential countries we may enter in the future. In terms of what makes Mexico competitive versus the rest of our portfolio, the country is a major producing region, unlike Honduras, Uruguay, or Tanzania where there is no substantial oil and gas activity as of today. This is a country that produces 2.5 million b/d and has the supply chain and expertise that supports this production. Moreover, Mexico is a strong economy, with great universities and human capital. All these areas play in Mexico’s favor.

Q: What is BG’s view on partnering with PEMEX, and what capabilities could BG contribute to such a partnership?

A: BG excels at partnering with NOCs. In fact, our strong partnership with Petrobras has led to some of largest hydrocarbon discoveries in the world, the offshore, deepwater, pre-salt discoveries. We would welcome the chance of having PEMEX as a partner. In such a partnership, we would bring our global expertise, including best-in-class exploration and drilling technology and our ability to quickly progress and de-risk frontier basins. Furthermore, PEMEX would bring the essential local capability, knowledge, and skills.

Q: What does BG Group consider to be the advantages of entering a consortium with other private operators?

A: In the industry, it is typical for IOCs to partner with one another to help share risk and to have appropriate technical capabilities. The same applies in the case of the bidding rounds in Mexico. Specifically, a consortium would bring together multiple technical teams to help validate and progress bids, which is particularly valuable in a short bidding round.

Q: What will be BG Group’s distinguishing factor to attract Mexican petroleum engineers and geologists?

A: Human capital will obviously be an issue for the industry in Mexico, just as everywhere else. This industry requires a large number of engineers and technicians, but universities do not generate enough graduates around the world. Even the UK and the US still incentivize foreign engineers to immigrate because they do not have enough engineers. The other way of looking at this is by acknowledging that Mexico has a vibrant oil and gas industry, thousands of engineers, and great universities. It will therefore not experience the same magnitude of skills gap that other countries have faced. Also, I am hopeful that the industry will start investing even more in human capital. Companies like BG Group and others are already looking at how to help universities have the right curricula and take Mexico’s human capital to the next level. That is a far more manageable challenge than having to build the system from the ground up.

Q: How will BG Group leverage its experience to adhere to the requirements stipulated by Mexican regulators?

A: First and foremost, we will deploy our own standards, which exceed many national standards around the world. We have a responsibility to the communities we work in, our shareholders, our employees, and our contractors, to operate in a safe and sustainable way. We do this by using international best practices and applying them consistently. Furthermore, we always welcome interactions with regulators, such as ASEA and CNH, which will allow us to work closer with them to ensure that Mexico has the right regulations in place to ensure safe and efficient operations.