Q: What prompted you to create a company focused on the Mexican upstream sector?
A: Mexico has a world class hydrocarbons base, and the fact that this industry has been monopolized by an underfunded national oil company for many years creates promising opportunities for foreign companies to work with PEMEX and the government in order to help develop the resource base. We are structuring Renaissance to be an operator in Mexico, and we are going to develop the company into a significant player in the local oil and gas sector in the next five years. We believe that our sole focus on this country will be an important success factor. The bidding round provided a solid opportunity for us to become an operator, learning the regulations as they are being developed, and we are happy to influence the regulations to benefit operators and the state. We bid on the onshore round, for which we spent considerable time evaluating all blocks made available. We felt that those opportunities, mainly the mature fields, were in line with the portfolio we intended to build in Mexico. The actual process of the third phase was remarkably professional and we were delighted with its execution.
Q: What was the reason behind your decisions to participate as a stand-alone company rather than with longstanding partners such as Halliburton?
A: We think that it is important to have a domestic partner in Mexico but we are in no hurry to establish that relationship. Although we are creating dialogues with various companies about potential partnerships, this is not a decision we want to rush into. We are fully capable of taking over operations, as we have the technical and financial capabilities to do so. We do not rule anything out when it comes to a possible partnership with Halliburton, our relationship with which has involved the use of its consultancy services. Halliburton has been established in Mexico for close to 70 years and has a great deal of empirical knowledge on the ground that a new company coming from another country usually lacks. We therefore felt that utilizing its services would allow Renaissance to hit the ground running in Mexico, enabling us to quickly negotiate the learning curve.
Q: What challenges have impacted your entry to Mexico?
A: There is a lack of information in terms of logging of data. More developed hydrocarbon provinces tend to have a more centralized database and greater access to it and, in time, it is something that Mexico should strive to develop in order to help all operators. Indeed, the fact that we do not have access to all of the existing data is problematic. I realize it is a process that takes time, where the data is passed from PEMEX to CNH, and then CNH makes it available to the industry, but this is an area where there is room for improvement.
Q: What potential do you see in Mexico in terms of unconventional reserves, and to what extent are you planning on taking advantage of this?
A: Renaissance intends to participate in R1-L05 and has carried out extensive evaluations in preparation for the opening of Mexico’s shale opportunities. The lead time for shale development is much longer than what is typical for conventional onshore resources. A detailed study of the geology and the rock characteristics is crucial to identifying and exploiting a commercial unconventional oil and gas play, and this analysis requires a substantial amount of time. We are reassured by the fact that Mexico will be moving forward soon with R1-L05, and expect these resources to be a major contributor to the nation’s petroleum production and a significant economic driver for the country in the long term.