José Pablo Mendoza
CEO
Octopus Group
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View from the Top

No Stopping for Pipeline Expert

Wed, 01/20/2016 - 15:36

Q: What are the main changes in the market in which you operate today compared to 12 months ago?

A: At the moment, PEMEX is neither a direct or indirect client for Octopus. Previously, most, if not all of the work we carried out involved the NOC, so that marks a considerable change in our operations. Fortunately, the pipeline systems demand products that we fabricate, so this is where our competitive advantage lies. We expected the results of Round Oneto be announced earlier. However, since this still has not been resolved, we are aware that the new players will slowly begin to enter at some point this year as a result of Round One. The reassuring aspect is that the process is beginning, and companies like ATCO are starting to approach us for collaboration in commercial ventures, whether inside Mexico or abroad. I believe that when PEMEX begins to work on its Round Zero blocks, it will require service providers and at this point we see a considerable amount of opportunity in this type of project, whether with the private sector or with PEMEX, given that R1-L03 awarded many similar fields to new private operators. These investments make economic sense regardless of the current crisis, but there is a considerable amount of work to be done in terms of marketing on the part of the winners of the Round One tenders.

Q: Which are your best positioned products, and which would you like to add in order to offer a more integrated service?

A: The area in which we see our future lies in packages and integrated turnkey services rather than recruiting onsite contractors. I foresee that these will be the services requested by most of the new private companies entering the market because they are used to this way of doing business, contrary to the way we typically do things in Mexico. The main reason that Cameron, ATCO, and Sulzer have approached us is because we are one of the only companies in the country with solid experience in integrated packages. Unfortunately, the last two years have been extremely volatile, meaning that we have had to offload some of our departments, such as instrumentation, so when the market begins to recover, we will have to reconstruct our teams for certain areas. Luckily, we have the most qualified staff, and as a result, this is something that will be possible for us. We are able to create products at a much lower cost, and with world class quality, which is guaranteed by our past products and contracts.

Q: What are the main areas on which you are working at the moment?

A: We have just finished a substantial project for Los Ramones, for AOT Pipelines, and we are in the process of contract negotiations for more work with the company. Also, we are working with ATCO on the Tuxpan-Tula pipeline that is currently under development, and we want to participate with IEnova, also on Tuxpan-Tula, with Gas Natural de la Huasteca in San Isidro, and with Sempra on Gasaducto Aguaprieta. We are currently quoting 12 launchers and receivers for AOT, but I am unsure for which project this order will be used due to the company’s significant workload.

Q: Apart from the private companies with which you are collaborating, what work do you have in the pipeline for public sector projects?

A: We are expecting to start work with PEMEX soon. We not only provide pig launchers and receivers, but also piping, spooling, and in some instances we will supply packages that include measuring. Instead of selling the product, we want to move toward selling the integrated service. The problem lies with the new PEMEX structure, because if PEMEX E&P has no need to pay PEMEX Gas for the gas it consumes, attempting to compete with zero cost is not a viable option. ATCO is currently moving slowly, but the company has mentioned that it wants us to provide substantial packages for projects in Pennsylvania. If that happens, we will be able to diversify from pipelines. I believe that the business will change greatly, and it will be interesting and challenging to understand the new outlook, and the new environment will require us to be much more assertive.