/
Insight

Oklahoma Seeks to Bring Equipment and Services to Mexico

Wed, 01/21/2015 - 17:40

Back in 2004, the state of Oklahoma hosted a pavilion in the Mexican Petroleum Congress. Not many people were familiar with the state or its position in the oil and gas sector. Today, Oklahoma is widely recognized for its technological track record and is a common destination for Mexican professionals who wish to increase their capabilities in the oil and gas industry. Luis Doménech, Managing Director of MILA, has been Trade Representative for the Oklahoma Department of Commerce since 2002. When he took on the role, some 80% of the consulting tasks were aimed at helping Oklahoma oil and gas companies enter the Mexican market. However, there were several barriers that prevented these companies from selling directly to PEMEX, ranging from the suppliers’ registration process to the language barriers. Doménech says that the registration process was designed for Mexican companies or large multinational corporations, so it was difficult to register foreign SMEs as PEMEX suppliers. Once this procedure was achieved, companies went on to participate in tenders but found that the language barrier was a huge obstacle, in many cases not allowing them to present proposals translated into Spanish in a timely manner. Doménech claims that even if these companies were able to table a technical and financial proposal on time, they were all too often unsuccessful or disqualified.

After a steep learning curve, Doménech’s office began linking Oklahoma-based companies with local distributors and representatives. The success rates of these companies improved substantially. “I saw companies trying to sell to PEMEX for years without success. When they partnered with the right local players, success immediately came through, with some companies closing contracts worth between US$1-6 million in a very short time,” says Doménech. The Oklahoma Trade Office came to the conclusion that there were two ways for equipment and technology suppliers to reach PEMEX. The first was through selling to large PEMEX contractors who mainly handled projects for the NOC. The second, and most successful, was by selling through local distributors or representatives who would multiply sales in Mexico for PEMEX and its contractors. According to Doménech, these distributors have managed to make Oklahoma-based companies very successful in Mexico as they combine the excellent technologies offered by the state’s suppliers with the great service and support capabilities of local players. Oklahoma’s manufacturers have found success in the Mexican oil and gas sector by selling products such as valves, control equipment, solids control equipment, flaring equipment, heat exchangers, separators, compressors, and drilling rigs, among others.

The Oklahoma Trade Office now has high expectations regarding the outcome of the Energy Reform because more transparent purchasing processes within PEMEX are expected to open the doors to more Oklahoma companies. “Many Oklahoma companies with great technologies and services do not yet have a presence in the Mexican market. While Oklahoma is well known for its traditional oil and gas technologies, it can provide leading technologies for unconventional wells and state-of-the-art technologies for environmental protection and risk mitigation,” adds Doménech. He foresees that the best news related to the Energy Reform is that opportunities will not be limited to one client. This is because there will be several players in the market demanding goods and services. He is optimistic that new E&P market entrants will become active clients for Oklahoma goods and services. “With these major players, Oklahoma companies will be able to submit proposals in English and compete in a bidding process where the best solutions are sought,” he comments. Another area in which Oklahoma firms have been successful is in selling to companies that won integrated service contracts. However, this has primarily benefited equipment suppliers from the state rather than its service providers. Doménech foresees a change in this situation because of the Energy Reform. “Oklahoma has leading companies in unconventional resource development, as well as companies with past experience in shale oil and gas exploration and extraction in areas like Eagle Ford, which has similar geological conditions as the north of Mexico.” These companies will now have a higher chance to both supply services and to actively explore and produce in Mexico.