Survival of the Fittest in Oil ServicesWed, 01/18/2017 - 23:57
Q: What is Sumimsa’s strategy to remain competitive in the oil and gas industry?
A: Our clients want more integrated services sourced from only one company at a lower price, so as well as cutting operational costs we are adding services to our core business to become a one-stop shop. We are also expanding and diversifying our business to the mining, automotive and construction industries.
PEMEX is our main customer but it has reduced operations. Despite this reduction, we need to increase our dealings with the company in terms of products and services. In 2015, PEMEX had about 40 operational drilling rigs and this number has now dropped to four or five. We need to supply more products and services to the remaining rigs to increase our sales volume. Sumimsa sells and rents handling tools for drilling, consumables, drill lines and valves and also provides a trailer-homes service.
Q: Are the conditions in Mexico ready for global oil companies to set up shop and what will be Sumimsa’s role?
A: Mexico is a good country for international companies to invest in. Mexico has better conditions than some countries already hosting IOCs. It does not have the issues seen in Angola, Nigeria, Iran and Kuwait, for example, so we are a better investment option. We are defining a strategy to contact companies entering the market for the first time. If companies arrive with suppliers from other countries, the Mexican government must work to ensure newcomers contract the services of local suppliers.
We can provide consumables such as handling tools, drilling tools, valves, shakers and many other equipment parts used on rigs. We will be excellent partners for any new company because we can offer complete solutions for the drilling services they require.
Q: Are you working with any of the other larger oil service providers like Schlumberger and Baker Hughes?
A: With the problems in the industry resulting from low oil prices, most of the offshore oil rigs in Mexico are working with Mexican companies. Sumimsa is working with most of them including Oro Negro and some logistics companies.
We are ready to start providing our services to foreign companies when they enter the market, applying the
model we already use with Mexican firms. We buy products directly from manufacturers, ensuring a high level of quality. 217 We also train people to use the tools and services and our prices are competitive.
Q: How did the lower oil prices of 2015/16 impact your business model?
A: Our business model has not changed much as a result of lower oil prices. It is not always possible to cut the prices of the products and commodities we sell because they have fixed costs. On the other hand, we have lowered the price of some of the services we offer to maintain competitiveness. Many other companies are also shaving costs. Before the drop in oil prices, salaries were inflated and rent for warehouse space was also extremely high. Now both are more normalized. To survive in the new market, companies must be financially strong, more efficient and innovative in their business strategies.
Q: What will Sumimsa do to win new contracts in the coming year?
A: The key to remaining competitive is to stay close to customers and to continue offering services despite the low level of activity in the industry. When business picks up again, customers will remember who stuck by them during the hard times. Our company is not very large and yet we represent important brands and vital services. Sumimsa knows the problems facing companies in the oil and gas market in great depth and we will be a good solution for incoming businesses and those already present in the country. Our company grew around 15 percent in 2016 by diversifying our business and through greater interaction with private companies. In 2017 we expect to grow at least 20 percent.