Strategic Partnerships for New Technology IntroductionTue, 05/22/2012 - 14:48
Historically, the domestic energy services industry in Mexico comprised small to mid-sized, closely held companies with limited access to capital and limited ownership of proprietary technologies. In the vast majority of cases, these companies acted as subcontractors to the multinational companies competing for large integrated service contracts with Pemex. The roles of the local subcontractors were narrowly defined, thus providing little incentive, budgetary resources or ability to engage in research and development activities, nor to acquire technologies. The 2008 Energy Reform endeavoured to change this by requiring that Pemex increase the national content of its procured services.
Domestic energy service companies have increasing opportunities in this environment to capture new and larger contracts, but only if they can address Pemex’s need for new and better technologies and its preference for obtaining these services in the form of integrated solutions. The challenge for these small to mid-sized companies is to mature rapidly, and develop or acquire new technologies and technical expertise to satisfy the requirements of Pemex. One tactic that can speed up this process is technology transfer (in the form of licenses or joint ventures) from the range of international service companies that have made strong inroads in other markets, but have no established footholds in Mexico.
In many oil and gas markets, it is not just the large multinationals successfully conceiving, developing and deploying new technologies, but also the mid-market service companies. The latter companies are usually illequipped to enter the Mexican market on their own. The rules and practices for contracting with Pemex are still quite dicult for an inexperienced foreign company to navigate. In past years, some mid-market service companies have attempted to enter Mexico and failed for one reason or another, thus creating the impression that doing business in Mexico is too dicult and risky. When you combine these factors with the general language and cultural dierences, plus the huge size and complexity of serving a national oil company like Pemex, it only makes sense for the foreign company to team with a successful local operating company. A good local partner can provide important insights into Pemex’s precise needs and guide the team through the everyday functions of bidding, contract negotiation, labour and materials sourcing, project management and invoicing. A competent partner can also provide engineering and project management experience to complement the international company’s unique technology as well as its specialized expertise in delivering an integrated solution.
The greatest opportunities for this type of cross-border collaboration are in two main areas: firstly, infrastructure projects that improve existing assets’ eciency and eectiveness, thus extending the projects’ useful lives; and secondly, production enhancement services that extend the lives of reserves and increase existing fields’ recovery rates. The large onshore drilling programmes and deepwater projects also require advanced technology, but due to their size and complexity, these are still the province of large multinational service companies. The typical domestic service company cannot compete eectively in these segments, except for niches where speed and flexibility still trump size and financial resources.
In order to be an attractive and eective partner, a domestic service company must be capable of leading the marketing, planning and execution processes of high value projects. The domestic partner must have a strong track record with Pemex in related service areas, so it can identify the NOC’s specific needs and apply new technologies and expertise to immediate problems and challenges. Oil International Services has positioned itself to acquire technology and expertise through licensing and partnering arrangements, leveraging its traditional strengths in service niches where it has demonstrable marketing and project experience. The domestic partner must also be able to anticipate evolving opportunities in time to seek the right international partners and convince them to focus their resources on developing a joint technology transfer strategy. Bringing a compelling market opportunity to the international service community with a well-constructed business case and the key execution elements already in place takes a high degree of discipline, planning and foresight. But it is the only way to attract advanced technology providers to Mexico as opposed to opportunities in other markets.