What Are the Challenges Involved as Mexico Moves to Deepwater?
As PEMEX enters ultra-deepwaters for its first joint venture with a private company and the winners of Round 1.4 begin developing the eight deepwater blocks awarded, Mexico’s state oil and gas company is drifting into uncharted territory. Lakach, the country’s only other deepwater project, reached a depth of 988m. The Trion block is more than double that depth, reaching around 2,500m. The technology, strategy and risk involved in operating at such great depths far exceed anything PEMEX and Mexico have dealt with before. We asked industry players what challenges PEMEX and new operators face as they take on Mexico’s deepwater for the first time and how they can help.
James Buis
Trion is a great deepwater project but it will raise a lot of challenges, given that it is a little deeper than the average for these types of projects. Since we have the experience of working with other companies around the world in deepwater, we would like to get involved as soon as we can to help gauge what the needs will be. Additionally, we can help assess risk on the Trion project through the many proprietary models that we work with and that are designed to use the limited information available at the beginning of a project and assign risk categories. Depending on the client, the terminology is different and Nalco Champion adapts to each one. We assess the risk of asphaltene inhibition, hydrate and corrosion inhibition
Jorge Leis
PEMEX will have to look for guidance from its partners and learn how to become an effective operated by others (OBO) partner. Being an OBO partner does not mean it will have limited influence; almost all of the IOCs and major independents use this model. Companies frequently make a discovery but do not have the capital to develop it, forcing them to bring in partners or to convert the asset into an OBO. The ability to develop an effective OBO model will allow PEMEX to not only take part in projects that require capital investments beyond its means but to build important capabilities over time. To achieve this PEMEX must do more than just change the name of its institutions. It ultimately must change its decision-making processes and reduce red tape. Doing so involves a cultural change in an institution that has well over one hundred thousand employees.
Juan Segura
The development of a deepwater industry is definitely a major challenge for the Mexican insurance market, considering that the Mexican side of the Gulf is mainly an unexplored area. The initial factors that will impact insurers and reinsurers will be the high exploration costs this will involve and the length of the projects. The high and long-term exposure will increase the uncertainty for potential Mexican carriers to underwrite the risks and provide coverage. On the other hand, the global reinsurance market’s soft trend with no obvious signs of an upturn in prices will counteract the local market’s position. The main challenge will then be to achieve price stability for insurance policies as the deepwater industry evolves from exploration to production.
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