Successful Explorer Seeks to Develop Mexican Deepwater

Q: How will Ecopetrol’s exploration activities in the US Gulf of Mexico influence the company’s business strategy to participate in the Mexican deepwater bidding round?

A: Ecopetrol has been closely studying the geological environment of the Gulf of Mexico for nearly seven years. We have performed regional studies alongside with renowned international operators, such as Shell, Anadarko, Statoil, and Pepsol, among others, which have provided us a level of knowledge about the Gulf of Mexico. These partnerships have resulted in five major discoveries in the US deepwater. The fields that we have explored extend into the Mexican part of the Gulf. Ecopetrol wants to seize opportunities of this nature, through partnerships with PEMEX, and companies that we currently operate with in the US, in order to continue increasing knowledge and value in environments similar to those that will be tendered in Mexico’s deepwater rounds.

Q: How have Ecopetrol’s expertise and capabilities prepared the company to successfully enter the Mexican market?

A: The first thing that Ecopetrol did after its transformation was to develop and implement a strategic plan that resulted in significant growth. Today, the company has 9,100 direct employees and about 40,000 contracted workers. Our production rose from 300,000b/d to nearly 770,000b/d in a relatively short period of time. In addition, we started to dabble in foreign markets. We have invested in about 150 blocks in association with major companies on the US side of the Gulf of Mexico, as well as in Brazil, Peru, and, more recently, Angola. Mexico is now a strategic priority for Ecopetrol, since the company has an exploratory strategy that includes complex and competitive environments such as deepwater. In Colombia, we followed a learning curve to develop mature fields, which has allowed us to increase production by 200% in certain assets by using our own technology. Another of Ecopetrol’s strengths is the production of heavy oil. All these areas of expertise combined make the oil company suited to participate in the different opportunities in Mexico.

Q: What have been the critical success factors since Ecopetrol’s transformation in 2003?

A: Since its inception in 1951, Ecopetrol has been an industrial and commercial state-owned company. That condition was maintained until 2003, when Colombia’s energy sector underwent a transformation which completely changed the structure and nature of the company. Before that, Ecopetrol was strongly dependent on the national budget. This situation prevented us from developing aggressive investment plans and limited the company’s growth capacity. After the transformation, Ecopetrol lost its role as a regulator of the oil and gas sector and became a public limited company. As an equal player in the open market, Ecopetrol found itself fiercely competing with the private sector. Additionally, the reform allowed the company to have budgetary autonomy and greater flexibility to develop an investment plan.

Q: How will Ecopetrol lure local talent into joining its team, and what distinctive factors will attract Mexican petroleum engineers and geologists?

A: The availability of human talent is certainly a key factor for success when deploying an investment strategy in any country, which is highlighted in Mexico now that the market has been restructured. We have been assessing opportunities to recruit Colombian professionals operating in other parts of the world, as well as carrying out meetings with experienced professionals in Houston, Calgary, and the Middle East, all of which could be important bases of human talent. In Mexico, qualified professionals with vast experience can also be found. Our commercial office in Mexico is entrusted with the task of identifying said talent, which may well be incorporated into the teams Ecopetrol will have working on the upcoming bids.

Q: Which operational, technological, and financial characteristics is Ecopetrol seeking in a partner for its potential activities in Mexico?

A: It is important to mention that, in Colombia, Ecopetrol has 39 partnership agreements with 32 companies of all sizes from around the world. We would apply the same strategy in Mexico by seeking highly synergic relationships, in which our partners must possess high levels of efficiency and productivity, knowledge of the exploration and production environments that will be offered in the rounds, and the ability to incorporate technology and transform it into value. Obviously, our natural partner would be PEMEX, given its vast knowledge and experience.