Ten Years Creating Value

Q: What steps has CBM, an upstream consultant, taken to remain competitive and attractive to potential customers?

A: We recognize three essential necessities to remain competitive in this industry: technical knowledge, local and international experience and the quality of our people. We are invested in preparing our human capital to stretch their knowledge and skills and to make this skillset sustainable. As a company, we foster the exchange of expertise between our experienced staff and the new entrants coming into the company so they can combine their mutual strengths. We also keep abreast of the most recent technological developments and their different applications. We strive to be cost-efficient and price competitive amid such a volatile market. We look at our balance sheets on a constant basis to avoid sacrificing our profits and losing competitiveness in the market. Finally, we also deem operational efficiency key to surviving in this market, and this is something we repeatedly tell our customers so they focus on the aspects that are adding value to their companies.

Q: How does CBM’s venture into project management strengthen your clients’ expertise?

A: Our leading source of projects in this field comes from our long-standing partnership with PEMEX, which spans the last 10 years. We have an ongoing dialogue with the NOC on how to understand and apply the concept of project management to developments that go beyond construction and EPC contracts, where it has vast experience but yet it outsources most of the project management. In the past year, we have worked with PEMEX on how to employ a project management approach to any big project and to increase its profitability and its learning curve by carrying out its own projects in the future.

The first project management processes we employed with PEMEX were in the farmout arena where it wants to grow. We will translate this knowledge to projects related to technology, reservoirs, transportation and storage.

Q: How do you help PEMEX create value and better implement its strategy given the changes at the company?

A: Understanding the scope and impact of these changes has probably been the hardest lesson PEMEX had to learn. The Energy Reform itself was a milestone in the modernization of the country that went beyond PEMEX’s vision of a market that it insufficiently served; it was in desperate need of transformation. This idea of regeneration shook the NOC to its core, it transformed the mindsets of those in control and modified the arrogant flare resulting from its monopoly status. Looking back 10 years, this was the main challenge CBM had to overcome when we started doing business with the NOC. The new people in charge have a better understanding of where PEMEX needs to go but I also hope to see a long-term vision from the government. This vision is modified every six years when a new government is elected and this is harmful for the country.

Q: What are the requirements for PEMEX to complete its ambitious upstream and farmout plans?

A: First, it is important to envision what kind of company PEMEX wants to become and then design a well-structured plan to handle its upcoming projects. The farmouts PEMEX is trying to implement require the establishment of completely different relationships with a series of companies. If the NOC signs 100 farmouts, the company will need to form 100 different relationships. This is a gargantuan task given PEMEX’s current status. In theory, the company would have to split in two to service its own portfolio and the 400-plus assignments it decided to take over in the rounds, while the other half would deal with all these farmouts and the relationships that result. Furthermore, there are many things PEMEX has to put on the discussion table along with CNH, the Ministry of Finance and the Ministry of Energy. There are questions to address, such as how to coordinate these farmouts, the definition of majority shareholders, financing sources and so on. It is certainly doable but there are many factors to take into account to make it successful.

Q: In which ways can CBM foster this discussion to help PEMEX make the most of its projects?

A: The vision is to be successful with these partnerships and the discussion should move in that direction. PEMEX would need to retain the best fields for farmouts and hand poor-performing fields back to CNH. It is likely it will survive financially since the good fields will be profitable. In this regard, CBM can help PEMEX obtain the best portfolio.

Q: How does CBM help new companies entering the market to speed up their learning process and become profitable?

A: Most of the operators we serve here are smaller, since the majors use technology to transfer knowledge among their teams. This is detrimental to Mexico’s talent development since these large companies are not sharing their knowledge and they are not hiring locals to fill the highest positions. In that sense, there are only two entities with the capacity to provide such knowledge, PEMEX and CBM. We have the upper hand since our people have worked in international environments, whereas PEMEX’s staff only have local experience.

Q: How does CBM’s Integral Center for Talent Development (CITD) help your customers understand the market?

A: We have a three-pronged approach. We work for the customer, with the customer and teach the customer how to replicate this success through constant training. We have designed methodologies to accelerate the learning process so we can have a working team fully assembled as fast as the customer requires. The CITD facilitates and accelerates knowledge transfer. It has a portfolio of courses in which clients have real problems or specific challenges that need to be solved. The mentors and instructors have knowledge and experience and use the technological applications required to address different situations. The CITD also has international instructors who support the center to ensure our clients are up to date in terms of knowledge and technologies.

Q: What are the main challenges and possible changes that could occur as a result of the presidential election?

A: Mexico is facing the possibility of radical change in the country’s policies. Continuity implies following the same path the Energy Reform has opened and a radical change may imply the revision of the contracts and a change in the approach to the market. But it is unlikely that any of the candidates would eliminate the changes already made. The new president could review the auction process, to be sure of the transparency process, but not necessarily change the results. In any case, the new government must objectively evaluate the results of the reform and adjust whatever may be necessary to improve the processes, with a vision that ensures a better future for Mexico and its citizens.

Q: What services will CBM introduce in the next year?

A: For a technical firm such as CBM, it is imperative that we stay on the move technologically speaking. To move forward means to keep improving practices and to adapt internal processes to external demands. It also means to understand changes and to turn things around, proposing new practices that add market value. That is what we have done in the past and what we will continue doing in the future. One of the most important issues international operators have been facing is the concept of operational efficiency, and respond to the question of how to survive and compete in a US$50/b price environment. Operational efficiency is related to the application of strict processes and technologies to optimize value creation. It has to do with the use of digital technologies to reduce risk and accelerate data collection. It also has to do with organizational effectiveness to ensure a company has the proper capabilities and skills to develop a project and to deal with more collaborative processes among companies. This will maximize the use of common resources and services. CBM is prepared to assist and support our customers with these challenges to ensure we remain competitive and attractive for the new investors arriving here