Private Operators Taking PEMEX’s RoleBy Pedro Alcalá | Tue, 03/31/2020 - 12:07
Q: How has the market landscape for oil and gas EPC majors changed in Mexico in the past year?
A: It is clear that the government has a strategy of intense support for national industry players. They have sponsored this development through actions, such as the contracting of Packages A, B and C, which involved invitations to more small and medium-sized companies within the oil and gas EPC sector. It has also become clear that contracting methodology has changed in general. Tendering now takes place through closed and restricted invitations that are sent out after PEMEX has chosen, which invited companies to participate based on their more personalized market surveys. In 2018, the market was still mostly based on open tendering processes. While our perspective regarding our competitors and the best strategy to match their offerings has changed to a certain extent, our bidding strategy remains relatively unchanged. The same niches still exist in the Mexican EPC market.
PEMEX’s original plan was for the platforms that were tendered in December 2018 and January 2019 to be operating at some point between September and October 2019. This deadline was not met and was delayed to May or June of 2020. I would like to highlight the delivery of the Abkatun-A2 project. We are concluding the last details of the contract after delivering the platform. It was a world-class project, as I am sure PEMEX would agree. The platform is now processing the asset’s production, and it is clear that they are satisfied with the results.
Q: How has the project portfolio of your Altamira yard changed since the conclusion of the Abkatun-A2 project?
A: Our yard is busy with completing work for private operators to be delivered both to the Mexican oil and gas industry and to projects abroad, creating more than 2,500 direct jobs in Mexico. We just finished building and installing jackets for Fieldwood. We are building the CASSIA-C platform for BP that will go to Trinidad and Tobago. We are collaborating with ENI on the engineering and fabrication of the infrastructure for the Amoca field. We are also collaborating with MODEC in their handling of the FPSO that will be doing all the processing for ENI and we are focusing on building their modules. This is a question of cycles. The government talks about the lack of production from private operators in Mexico, but they had to go through their exploration phases before they could reach their work capacity. Projects that began with the bidding rounds that took place between 2015 and 2017 are now entering their field development phase after concluding their own processes of evaluation. Round One contractors are entering this phase. We are also executing the FEED work for operators in Mexico. We offset the gaps that this could create in our schedule by fulfilling contracts from the U.S. side of the Gulf of Mexico. This is partially assisted by our yard’s free trade zone status.
Q: How would you describe your current local content capacities at your Altamira facilities?
A: We are already developed in regards to local content and we contribute to the local economy. We are working with current and new suppliers identified through our in-house supplier development program. Once they enter McDermott’s supplier database, they can be called upon to deliver work anywhere in the world where we operate because they have proven to be able to communicate with our engineering systems and to meet our quality control, processing and safety standards, and any other relevant benchmarks. Safety in particular is very important to us. We have reached a record of millions of manhours without incident.
It is in our interests for our local content levels to increase and improve. It is not a question of going from zero to 100. We are already at very high levels. We are interested in slowly continuing to increase them. We have been employing these fabrication facilities since 2006, and all of these standards have been applied since then. Of course, our choice of suppliers has to be custom-made to the requirements of each project.
Q: To what degree are you interested in developing offshore services?
A: We are interested in continuing to focus on our core business, EPCI offshore projects. The delivery and transportation of food or diesel or any other similar offshore services does not currently interest us, those are completely different activities from the EPCI projects that we are focused on. Maintenance is another activity within the sector that is growing. Many Mexican companies are focusing their efforts on these types of contracts, and other companies that have been strongly dominating these types of projects in the last few years. I do not think it is worth it to compete with them.
Q: After your recent merger, what kind of onshore opportunities have you been exploring?
A: We were awarded a grassroot tank farm project for Tuxpan, and we are now in the midst of its execution. It is important to highlight that in the onshore sector, major EPCI projects that would be suitable for us to work on are rarely available. Onshore operators are still either in the early phases of their fields’ development or focused on increasing recovery and production in their mature fields. We would personally be more interested in larger onshore projects, such as LNG terminals.
McDermott is a premier, fully integrated provider of technology, engineering and construction solutions to the energy industry. Operating in over 54 countries, McDermott's locally focused and globally integrated resources include more than 42,000 employees, a diversified fleet of specialty marine construction vessels and fabrication facilities around the world.