Hermann Saenger
Managing Director
SGS Mexico
View from the Top

Planning is Crucial, Talent Gap a Worry

Wed, 01/18/2017 - 14:08

Q: As new companies enter the Mexican oil and gas market, what can SGS offer to these new players?

A: SGS has been in Mexico for 65 years and there are few companies besides PEMEX that have such extensive experience in the country’s oil and gas industry. We have been working with PEMEX for many years on its certification, consulting with the NOC on its growth and researching what goes on in Mexican land and oceans. We are excited to share this experience with all the new companies entering the market that are looking for opportunities. They will need partners who can guide them through this process, with knowledge of Mexican oil fields and infrastructure. SGS participated in the construction of many of these sites and in their operation, certification and testing.

As well as our local experience, we have had close contact with the biggest oil players worldwide from our oil expertise center in Holland: Horizon Services. Horizon is a leader in researching and developing knowledge, software and expertise for the oil industry. What SGS offers today is the combination of our international experience and Mexicospecific knowledge. For that reason, we believe we are going to be key players in the new chapter that began with the reform.

Q: How do inspection, certification and quality control processes here compare to other countries?

A: Since oil is an international commodity all companies must adhere to the same international standards. Even though there are many aspects still to be developed in Mexico the foundation of the business is already here. SGS provides the same quality, testing and certification for products in Mexico as in other countries.

Q: How can SGS assist companies entering the Mexican oil and gas market for the first time?

A: We are studying the market entry strategies of new companies so that we can offer the appropriate services while guaranteeing SGS’ worldwide quality standard. The services on offer will be a continuation of those we have been offering to other public companies so far, as well as some added value such as operations in our facilities in the main border cities and ports.

We are examining which investments to make and we are meeting with different key players in the industry to survey where it makes sense to start working together. We detect hunger to enter the market but unfortunately this eagerness has waned and companies have become more cautious about which projects to participate in.

Q: What are the critical factors for successful entry into the Mexican market?

A: No one wants to be the one to take the first step in a changing industry but when things start happening, everyone will want to participate at full capacity. SGS knows that a slow start can turn into a very demanding market in a couple of weeks. It is coming to the point where the flow of information is crucial, because if incoming companies wait until the last minute or decide to have everything ready from one day to the next, they are not going to be able to follow their plans. Therefore planning is crucial. If the oil price continues to recover companies will want to react quickly but those that did not plan enough are going to fall behind. It might not be the best of times but companies must prepare for better times now. This is how SGS is preparing to offer its services: by increasing our capabilities, training people, having more and more coordination in different sites and networking to be prepared for the market's opening.

Q: A lack of preparation for Brazil’s boom caused companies to scramble for skilled foreign labor. Could this happen in Mexico?

A: Gaps in talent and certification are pressing issues that we are definitely worried about. Since SGS covers other sectors such as aerospace and automotive, we tend to see what is happening in other industries and we often perceive a lack of experienced and highly trained personnel in Mexico.

Infrastructure can be built and equipment can be imported but if there are no trained people it will create a bottleneck. That is one of the reasons why we are taking action now by bringing one of our highly successful business areas to Mexico. SGS’ academy offers first-class, specialized courses in training personnel across a range of industries and levels.

Q: Are there enough service providers to help IOCs entering the market or will they turn to foreign entities?

A: Major international players have been serving the Mexican market for many years but more dedicated services will be needed as more than 25 new companies enter the market. Until today the same company was working on the whole chain, from extraction to production and distribution. Now that the market is going to be split into different companies there are going to be missing links in the supply chain. This is an enormous opportunity for smaller companies to start providing their services to new players. The problem is that these companies will not know their services are required until the time comes. There are also several possibilities for the provision of services that were not needed in the past because PEMEX was doing everything in-house.

Q: How will the rapid growth of the sector benefit the overall legal framework and quality standards?

A: The legal framework remains a challenge for new companies as the majority are new to the region. We need more legal support and guarantees that goods, products and personnel will be kept safe. That being said, a high level of quality is guaranteed in Mexico since it participates as a major player in the global oil industry and has done for many years, both as an exporter and importer. We are integrated in the markets with the same standards as the US and Europe. The international players will come with their international standards, which will be the same in Mexico as anywhere else. It is more a matter of establishing the correct flow and infrastructure to provide services without any major interruptions.

Q: What do you see as the company’s main competitive advantages, especially given the market’s changes?

A: SGS has been in Coatzacoalcos for over 35 years so we have a real footprint in the area besides being present in other important ports. We have been able to train people, many of whom have been with us for 15 to 20 years, so our brand is recognized. Our expertise, way of working and developing people are all advantages. Having that footprint helps us fine-tune the new necessities by providing new services for different companies. We know the companies in Mexico and also some international shareholders. An advantage is that they already know SGS’ reputation and services and they know we provide the same standard here as in any other country worldwide.