INSIGHT
AFTER A STRONG HIT, AN OPERATOR ON THE RISE BRUNO PICOZZI Director General of Sapura Energy Mexico
174
Activity is returning to oil and gas following a challenging
years, not in three or four as many are hoping,” he says. It
downturn. When factoring in the results of the bidding
is after those 10 years that he believes there will be enough
rounds, competition is tough for companies trying to win
activity to propel a thriving hydrocarbons market in Mexico,
service contracts from the new operators entering the
allowing for the creation of a strong value chain capable
country. But with memories of the crash still lingering,
of working together with international companies and
operators are demanding favorable reward-risk ratios.
even developing its own technology. “Until that moment
Sharing the risk through different contract models, says
comes, work will remain intermittent, which in turn means
Bruno Picozzi, Director General of EPC Sapura Energy
low security for service companies.”
Mexico, is one way to compete in this robust environment. With Sapura’s experience, it is therefore not limiting itself “As a company with activities across the oil and gas value
to only working as a service provider. “Because we are a
chain, from building and installing platforms and pipelines
fully integrated company with activities in every aspect
to drilling and producing hydrocarbons, we are capable
of the offshore value chain, we are capable of working as
of properly quantifying the risks associated with all these
an operator,” Picozzi says. “In that sense, we could take
activities,” he says. “In that sense, we can offer single or
part in both farmouts with PEMEX and in the licensing
integrated solutions that adapt to the client’s strategy.”
rounds. As a matter of fact, Sapura has prequalified as an offshore operator.”
Sapura Energy Mexico is a diversified company in the offshore sector. With three divisions — E&C, E&P and drilling
The regulators are learning lessons as they go in this
— global operations and a relatively young fleet, Picozzi
relatively new playing field and Picozzi also highlights
firmly believes the company is capable of providing services
the importance of Mexico taking advantage of the fact
that fully address the needs of the operators. In that sense,
that its industry is one of the last to open internationally.
Sapura is looking with interest at all the possibilities the
It is therefore capable of learning from others’ mistakes.
country offers to diversify its activities.
“Mexico remained a monopoly for a long time. Now the incentives the country is providing for the development
Initially, the company looked like it would brave the
of its oil and gas industry in such a difficult international
downturn with a strong 2015, when it performed four
scenario means investment is a no-brainer for many
platform installations and installed two major lifts and 40km
companies,” he says.
of pipelines. At the beginning of 2017, Sapura began to feel a budget squeeze but this did not discourage it from
Picozzi warns, though, that the country should tread
focusing on Mexico. “The hydrocarbon licensing rounds
carefully. One potential area for failure is that of local
are boosting activity in the arena and more discoveries are
content. “While the rules enforced by CNH and the
taking place, so we are preparing for an upturn in activities,”
Ministry of Economy require a healthy level of local
says Picozzi.
content, we can see this situation mirrored in the opening of Brazil’s energy market,” he says. “The country went
Mexico’s oil and gas industry has been bolstered by the
from producing 1.2 million b/d to 2 million b/d as the
successes of the oil and gas bidding rounds. But Picozzi
market opened. But as Brazil’s local content requirements
warns that to create a strong industry, the country needs
became ever stricter, investors felt wary of investing more
to keep the licensing rounds going for at least the next 10
in the country. These changes ultimately made projects
years. “The Energy Reform has been very successful in its
more expensive and disincentivized investment instead
first two licensing rounds but it must be recognized that
of promoting the inclusion of more local companies into
the industry will only develop to an adequate level after 10
activities.”
