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Insight

Stronger Legislation Needed to Bolster the Service Sector

Wed, 01/25/2012 - 12:47

“In past development of its shallow water assets, Pemex has faced many restrictions on investment. Therefore, it has not been easy for people to properly plan and manage the exploitation of the fields,” says Enrique Westrup Neira, President of CPI Ingeniería y Administración de Proyectos. “The situation we have today is not due in any way to a lack of experience on the part of Pemex’s engineers.” This is not a revelatory stance: Pemex for many years has been aware of the impact of budgetary constraints on its development plans.

“Another result of the budgetary restraints placed on Pemex has been the creation of the incentive-based integrated service contracts,” says Westrup Neira. However, he is not hopeful these new contracts will be successful given that international companies will not be able to book reserves under their current structure. Another issue for the future of these contracts, according to Westrup Neira, is a global lack of contractors to work on projects. “Every company in the market is looking to hire engineers and project managers to keep up with demand. This is something that we are trying to address in Mexico through the country’s Construction Chamber and Engineering Academy. The Academy has organized symposia in recent years, in order to discuss the future of engineering in Mexico. Our country needs stronger policy to bolster its internal market, as the contractors that Pemex is trying to attract will not bring legions of employees with them; the more effective strategy would be to hire locally and build businesses from the Mexican market. We have the potential to do this; there are more engineering students graduating in Mexico today than there are in the United States.

“This is how we will turn Mexico into a successful market, and how Pemex will reach the objectives of increasing its reserve replacement rate and production levels,” says Westrup Neira. “We need to find companies that can provide technology and capital for the long-term, rather than companies that are only interested in what I call ‘hit and run’. The international oil and gas companies that have been the most successful in Mexico to date, like Schlumberger and Halliburton, have committed themselves to the country for the long-term.”