Luis JAvier Campuzano Piña
Mexican Ambassador of Norway
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Norway Can Be Source of Collaboration ans Inspiration

Wed, 01/21/2015 - 16:15

Q: How could the current low oil prices affect the implementation of the Energy Reform in Mexico, and what implications could this have for the interest of Norwegian companies?

A: Low prices may represent fewer profits for the producers in the short term, resulting in companies paying more attention to where they can trim down costs or make their investments more efficient. However, oil companies are basing their investment strategy on long-term objectives and expectations. Right now, Mexico is going through an initial process within the implementation of the Reform, with the bidding process for Round One already underway. By the time projects associated with these bids actually reach the production stage, the oil price may be completely different. A confirmation of this potential outlook is that around 50 companies, including Norwegian companies, have a lot of interest in investing in Mexico. The Energy Reform has made Mexico a very serious investment opportunity despite the current oil price.

Q: What are the complementarities between the technologies, skills, and expertise developed in the Norwegian oil and gas industry and the operational and technological challenges facing this sector in Mexico?

A: The Norwegian oil and gas industry is very well developed, as it has leading companies at all stages of the value chain. Norwegian companies present a formidable source of training, experience, and partnerships. Mexico could benefit greatly from their technology, expertise, and leading position in activities such as exploration and production in deepwater, offshore facilities, shipyards, transportation, safety, environmental protection, and efficiency in the management of petroleum resources. It is important to highlight that some of these companies have already explored and participated in areas of the US Gulf of Mexico, giving them significant advantages when further exploring the region. The Energy Reform will present operational and technological challenges that Mexico has not faced before, meaning the country will need better availability of skilled labor, a change in local content requirements, and the strengthening of its new regulatory agencies. Overall, Mexico has laid out a model for the future, with the capability of attracting foreign investment and competing globally.

Q: What role could joint ventures between Mexican and Norwegian companies play in the intensification of bilateral cooperation between both countries’ oil and gas industries?

A: There is an abundance of connections and synergies that can be created between operators and suppliers from both countries. At the moment, more than 300,000 Norwegians work in their national oil and gas industry, across logistics, operations, services, management, and research, so Norwegian companies have developed a complete value chain. Emerging opportunities in Mexico have been categorized by several Norwegian companies as a priority interest, both for the significant number of proven, probable, and possible reserves, and for the new possibilities in the downstream sector. The Energy Reform also creates new opportunities for the development of joint ventures between Mexican and Norwegian companies. It is important to note that financial institutions such as Eksportkreditt and Bancomext have shown interest in offering credits to companies that decide to enter into joint ventures. This business model is an important alternative for the current Mexican oil and gas industry as it provides the opportunity to share investments, to access better distribution channels, and to obtain local experience and contacts.

Q: How can companies entering the Mexican market best overcome legal, regulatory, and human resources hurdles?

A: The Energy Reform has been carefully designed to improve the practices, operation, and management of Mexico’s hydrocarbon resources with clear and transparent regulations for the production process and the administration of income. Furthermore, this reform has taken place in a context of other major structural reforms, dealing with labor, transparency, accountability, fiscal issues, and competition. Together, these reforms will enhance the productivity and strengthen regulatory institutions, such as CNH, CRE, and ASEA. Foreign companies working in Mexico will see a modern, transparent, and competitive operating environment in accordance with best international practices and global trends, such as the transition to a low-carbon economy.