From Sourcing Hub to Strategic Operational Environment

Q: What have been the highlights during your four years as Shell Mexico’s Director General, and how different has this experience been from what you expected?

A: Although I initially entered Mexico with prudent expectations in order to avoid frustration, I believed that even if nothing were to happen in the energy sector, it would still be a rewarding experience. As a matter of fact, it has turned out to be completely different to what I had expected, with each year being notably different from the previous one. The main highlight for Shell was of course the Constitutional Reform. Mexico had been waiting for this shift for a long time, and when it happened, it left everyone with a great feeling of satisfaction and with the assurance that the country was moving forward. The next highlight was the day when the government awarded the first exploration contract. This was the manifestation of all the hard work that the country contributed to the constitutional and legal reforms. Finally, the announcement of the deepwater bidding round and a date by which offers must be placed was the third most significant event.

Q: How competitive is Mexico in the context of Shell’s global portfolio of opportunities?

A: Two aspects should be considered when attempting to rank the attractiveness of opportunities. The first one is materiality, which is the country endowment, without which little can be done. In this respect, PEMEX’s work over the years has made Mexico an attractive location. Only now are we starting to look into the country’s seismic data, but we believe that there is materiality and a promising source of hydrocarbons, which piqued our interest. The other aspect relates to a country’s terms and conditions and its global competitiveness. Despite the attractiveness of opportunities elsewhere, we believe that Mexico holds several promising prospects.

Q: Which role does its global sourcing hub in Mexico play in Shell’s global and local strategy?

A: Our hub has reinforced the merits of strategic sourcing in Mexico. We have noticed that in times of high oil prices, companies lack the incentive they now have in seeking the most cost-efficient supplier. In those times, players were unenthused at the idea of sourcing from Mexico, as they were used to working with their own suppliers. Now, however, they have no choice, and that makes Mexico much more competitive. This comes in addition to our exceptional geographic location, as well as the quality and the cost of our labor force. Another important factor when it comes to having a sourcing office in Mexico is that it is now not only evaluating opportunities for export, but it would also provide significant savings should Shell decide to undertake a project locally. So far, our sourcing office has been disseminating the market. The office has become extremely relevant because it allows us to compete even more successfully with projects outside of Mexico, and it allows us to deepen our understanding of sourcing opportunities for projects within the country.

Q: What would you advise the Mexican government to do today to make sure that the national content debate makes sense in the future?

A: It should apply the lessons learned from other industries, such as the manufacturing sectors, be it automotive or aerospace. I believe the government is already looking at them. Mexico is becoming increasingly open to global markets, namely with the Trans-Pacific Partnership. This is an opportunity for the government to look at the way in which these agreements affect other industries, and apply the lessons learned the oil and gas sector, allowing it to compete internationally. It is also important that local content requirements remain transparent in terms of administration. This is in the best interest of all players, given the number of people and processes involved. We must not get lost in the bureaucracy of administering the system.