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Stakeholders in the Mexican oil and gas industry have had to face an unprecedented situation over the past 12 months. Even though the industry suffered as much as any other in the country, companies kept on going without interruptions by presidential decree. The upstream subsector in particular had to modify its processes and practices drastically to keep business running normally, even amid other market-driven crises unrelated to the COVID-19 pandemic. Major upstream players have come out of this gauntlet of challenges with rewritten business strategies and new wisdom regarding the crucial importance of flexibility and adaptability. This persistence is beginning to pay off in the form of higher oil prices and renewed interest in prospective resources and upcoming infrastructure projects.The industry’s urgent development and technological needs were laid bare by the pandemic, but this also means that industry leaders are actively and enthusiastically looking for the right partners and talent to move forward and make the most of the current opportunities. As has happened before in this industry, however, these opportunities are clouded by uncertainty, assumptions and media noise. Mexico Oil & Gas Summit 2021 brought together industry leaders who can identify these opportunities to share the strategies that were proven to be the most successful in guaranteeing the industry’s survival while still looking toward the future during one of the industry’s most stressful periods.
4
C on f e r ence I mpact
132
companies
411
conference participants
How would you rate the quality of the conference program and speakers?
75% Exceeds expectations 25% Meets expectation
Breakdown by job title
50% Manager 36% VP / Director 14% CEO/ Director General
50
speakers
Conference social media impact
10
sponsors
7,400 direct impressions during MOGS
4,644 visitors to the conference website
Pre-conference social media impact 6,956 direct pre-conference LinkedIn impressions
0.6% click through rate during MOGS
3.2% pre-conference click through rate
2.3% conference engagement rate
6.2% pre-conference engagement rate
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245
participants
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Matchmaking intentions
1,243
matchmaking communications
161
1:1 meetings conducted
75% Exceeds expectations 25% Meets expectation
1,226 Trading Total
1,999
170 Recruitment 177 Investment
5
C ompan y Attendance •
3M
•
Golfo Suplemento Latino
•
Acclaim Energy
•
Gonzalez Calvillo
•
P&A Integrity Management Company
•
Ace Oil Tools
•
•
ADS
•
Goodrich Riquelme y Asoc.
•
Grupo Construcciones Planificadas
P&A INTEGRITY MANAGEMENT COMPANY
•
Aeromexico
•
Ainda, Energía & Infraestructura
•
P3 GLOBAL PERSONNEL
•
Grupo Fapin
•
PEMEX
•
alterpraxis
•
Grupo Gasolinero Gaspeed
•
Perseus S.A de C.V
•
Grupo Roales
•
PETRONAS Mexico
• •
American Bureau of Shipping
•
Grupo TMM
•
PM Offshore S.A. de C.V.
AMEXHI
•
Halliburton Mexico
•
PPG INDUSTRIES
•
Arendal
•
Heerema Marine Contractors
•
Protehus, LLC USA
•
ASESARO, S.A. DE C.V.
•
Holland House Mexico
•
Public Power Utility
•
AVEVA Software México
•
Huasteca Ventures
•
RelyOn Nutec de Mexico
•
Baker McKenzie
•
ICA FLUOR
•
Repsol
•
Balam Energy
•
IEnova
•
REPSTIM S.A. de C.V.
•
Beicip-Franlab
•
IHS Markit
•
Roma Energy
•
Belden, Inc.
•
Independent Consultant
•
ROSEN Group Mexico
•
BHP Mexico
•
Indimex Group
•
Safelift Offshore Ltd
•
Buckman
•
INERCO
•
Schlumberger
•
BUHLMANN Mexico, S.A. de C.V.
•
INTEGRITY MANAGEMENT COMPANY
•
Servicios Tecnicos Consutec
•
SGS
•
BUREAU VERITAS MEXICANA SA DE CV
•
Intelie
•
Shallow and Deepwater Mexico
•
Subsea 7
CAPE Holland
International Cluster of Energy in Mexico
•
•
•
Talos Energy
International Frontier Resources
•
Technip FMC
•
Thompson & Knight LLP
•
CAYROS GROUP
•
Cayros Group Corp.
•
•
CDT
•
IPD Latin America
•
TMM
•
ChampionX
•
iPS - Powerful People
•
Tonalli Energia
•
CNOOC Mexico
•
Jaguar E&P
•
Transocean
•
Comisión Nacional de Hidrocarburos
•
Kas Oil Integrated Services
•
Vallourec Oil and Gas Mexico
•
Kiewit
•
Verisk Maplecroft
•
Comisión Nacional de Hidrocarburos
•
KLB Group México
•
Vista Oil and Gas
•
KRIMTEK Solutions
•
Vopak
•
Construplan
•
Lao strategy and leadership
•
Walworth
•
Consultec International
•
MAPFRE Mexico
•
Wellbore Integrity Solutions
•
Copiisa Offshore
•
MCDERMOTT
•
W-Industries
•
COSL Mexico S.A. de C.V.
•
Mexico Business
•
Wintershall Dea
•
Cotemar
•
MexicoView
•
Worley
•
Cotemar
•
Mexssub International
•
Yokogawa Europe Solutions BV
•
Diavaz Servicios de Produccion
•
Mitsui & Co Power Americas
•
DNV
•
Murphy Oil Corporation
•
ECO Direccion Profesional
•
Muvoil Consulting
•
Emerson Automation Solutions
•
NAVIERA INTEGRAL
•
Energy Industries Council
•
NRGI Broker
•
ENGIE
•
NTheetherlands Embassy
•
Eni México
•
Nuevas Soluciones Energéticas
•
Ernst & Young
•
OCA Global
•
Evonik Industries
•
OCEAN MARINE SA DE CV
•
Exterran
•
offshore services
•
EY Mexico - Mancera SC
•
Oiltanking Mexico
•
Galicia Abogados
•
Oleum Energy
•
GH Energy Consulting
•
OPITO
6
P r og r am D ay 1
J ULY 14 TH , 2021
08:00
NETWORKING OPPORTUNITY - AI-POWERED 1:1 MEETINGS
08:55
WELCOME ADDRESS
09:00
TIME TO CAPITALIZE ON MEXICO’S OIL & GAS RESOURCES
Speaker: Merlin Cochran, General Manager - AMEXHI 09:45
MEXICO’S EVOLVING LEGAL & REGULATORY LANDSCAPE
Moderator: John Padilla, Managing Director - IPD Latinamerica Panelists: Yolanda Villegas, Founder & Partner - Oleum Servicios y Dictaminaciones David Enriquez, Founder & Partner - Goodrich, Riquelme y Asociados Rafael Espino, Independent Advisor to PEMEX 10:45
PRIVATE OPERATORS’ PRODUCTION PLANS
Moderator: Schreiner Parker, Senior Vice President & Head of Latin America - Rystad Energy Panelists: Andres Brugman, Country Manager Mexico - Fieldwood Energy Sylvain Petiteau, Vicepresident Reservoir, Development, Engineering Non-operated Assets - Wintershall Dea México
12:00
NETWORKING OPPORTUNITY - AI-POWERED 1:1 MEETINGS
12:30
INDUSTRIAL SAFETY PERFORMANCE AND PRIORITIES
Speaker: Lic. Jose luis Gonzáles González, Head of the Supervision, Inspection and Industrial Surveillance Unit - ASEA
13:15
HR, OUTSOURCING AND SAFETY: CREWING THE INDUSTRY IN 2021
Moderator: Rafael Daryanani, Regional Manager - Mexssub Panelists: Guido van der Zwet, General Manager - IPS Powerful People Christian Eduardo Heras , OPITO Coordinator - Relyon Nutec Daniela Nava, Human Resources Manager - Vopak
7
P r og r am D ay 1
14:00
NETWORKING OPPORTUNITY - AI-POWERED 1:1 MEETINGS
15:00
RESULTS-FOCUSED EXPLORATION TECHNOLOGY INNOVATION
Moderator: Gustavo Hernandez, International Vice President - Mexican Union of Engineering Associations UMAI Panelists: Gerardo Clemente Martínez, President - AMGE Jeimy Mathison, General Director - Kasoil Eduardo Arriola, Operations Manager - Golfo Suplemento Latino 16:00
PROJECT PRESENTATION: TRION BHP
Speaker: Stephan Drouaud, Director of the Trion project - BHP 16:00
“DEEPWATER: WHO, WHERE AND WHEN?”
Moderator: Valeria Vazquez, Energy and Resources Leader Mexico-Central America - Deloitte Panelists: Dra. Alma América Porres, Comissioner - CNH Carlos Ortiz , Chairman IADC LATAM and Marketing Director at Transocean Chris Brinzer, Exploration Manager - Petronas Luiz Feijo, Director of Global Offshore Production - ABS Bud McGuire, Chief Operating Officer ADS Consultoría Petrolera - Alpha Deepwater Services
17:30
NETWORKING OPPORTUNITY - AI-POWERED 1:1 MEETINGS
19:00
END OF DAY 1
8
P r og r am D ay 2
J ULY 15 TH , 2021
08:00
NETWORKING OPPORTUNITY - AI-POWERED 1:1 MEETINGS
08:55
WELCOME TO DAY 2
09:00
NEW URGENCY FOR AUTOMATION & REMOTE OPERATION AFTER COVID-19
Moderator: Amanda Duhon, Regional Director – North & Central America - Energy Industries Council Panelists: Laurent Pagnon, VP Digital, External Technology - Technip FMC Ricardo Velazquez, Manager Application Engineering - Belden Manuel Arroyo, Industry Solutions O&G Director - Emerson Augusto Borella Hougaz, Vice President Of O&G Products - Intelie Eugene Spiropoulos, Global Systems Business & Consulting Leader - Yokogawa Fernando Arcos, Director of PMO at W-Industries 10:00
SUPPLIER PRIORITIES IN THE OFFSHORE SERVICES MARKET
Moderator: Luis Vielma Lobo, President & General Director- CBMX Panelists: Sonia Castellanos, Geomarket Manager Mexico and Central America - Schlumberger Hermes Aguirre, Mexico Country VP - Halliburton Cesar Vera , Chief Commercial Officer - Naviera Integral Javier Cabrales, CoatingInfluXpert O&G - PPG Comex 11:00
REGULATORY COMPLIANCE & RISK MANAGEMENT
Moderator: Benjamín Torres-Barrón, Partner - Baker McKenzie México Panelists: Jose Bosch, General Director - Oleum Energy Eckhard Hinrichsen , Country Manager- DNV México Graciela Álvarez, Chief Executive Officer - NRGI Broker Rodolfo Alfonso Esquivel, Director - Grupo Roales Francisco Javier Hoces, Director of international consultancy - INERCO
9
P r og r am D ay 2
12:00
NETWORKING OPPORTUNITY - AI-POWERED 1:1 MEETINGS
12:30
FUTURE ROLE OF NATIONAL GAS PRODUCTION IN SATISFYING NATIONAL DEMAND COMPETITIVELY
Speaker: Warren Levy, Chief Executive Officer - Jaguar Exploración & Producción 13:00
ONSHORE OIL & GAS PRODUCTION OUTLOOK
Moderator: Niels Versfeld, Chief Executive Officer - Simmons Edeco Panelists: Alexandro Rovirosa, Chief Executive Officer - Roma Energy Holdings Iván Galbán , Commercial Director - Exterran Dr. Héctor Moreira, Comissioner - Comisión Nacional de Hidrocarburos CNH 14:00
NETWORKING OPPORTUNITY - AI-POWERED 1:1 MEETINGS
15:00
PEMEX: PRODUCTION PERFORMANCE AND THE PATH TO PROFIT
Speaker: Fluvio Ruiz, Independent Oil and Gas Analyst and Former Independent Advisory Board Member PEMEX
15:30
PRESENT MARKET OVERVIEW
Speaker: Pietro Ferreira, Senior Regional Analyst - Americas - Energy Industries Council EIC 16:00
FINANCING THE FUTURE
Moderator: Rodolfo Rueda Ballesteros, Partner Houston & Mexico -Thompson & Knight LLP Panelists: Arturo Carranza, Independent Energy Advisor - Comisión Federal de Electricidad CFE Manuel Rodríguez, Founder and Director General - Ainda Energía & Infraestructura Lucas Aristizabal, Senior Director, Latin America Corporate Ratings - Fitch Ratings 17:00
NETWORKING OPPORTUNITY - AI-POWERED 1:1 MEETINGS
19:00
END OF DAY 2
10
C on f e r ence H ighlights THE TIME TO CAPITALIZE ON MEXICO’S OIL & GAS RESOURCES IS NOW Mexico, considered a country rich in oil and
Investment and project development are
gas resources, has many opportunities to
paramount to the oil and gas industry, but
make good use of them. Merlin Cochran,
the social benefits that the industry can
General Director of AMEXHI, kicked off
provide for a country like Mexico need to be
Mexico Oil and Gas Summit 2021 by saying
highlighted too. Regarding the environment,
that the time to make good on this promise
Cochran reported that the sector’s efforts to
is now. By spreading the social benefits of
go beyond compliance with regulation, such
hydrocarbons and channeling investments
as around methane. The industry’s work to
into expanding Mexico’s reserves, this can
impulse the green energy transition using
be achieved.
natural gas as transition fuel will be essential up to 2050. The industry furthermore has
AMEXHI is an industry association that
a lot to offer in the social dimension. Other
was established as a consequence of
than providing employment, the sector
both the Energy Reform and CNH bidding
helps Mexico move forward by providing
rounds. It is considered the most important
education and infrastructure. Community
industry association for private oil and
engagement is of particular importance to
gas operators in Mexico, representing all
companies, stressed Cochran. “Communities
major bidding round winners. Seventy-
are partners in projects for the long term. It
two percent of its partners are foreign
is therefore important to work hand in hand
companies stemming from 17 countries.
with them.”
The majority of them are active in offshore operations: 62 percent. Even though only
Nevertheless, if the industry wants to spread
30 percent of the association has reached
these benefits, it needs to make optimal
production, many others are getting close
use of the potential Mexico possesses.
to this stage. “Promoting best practices in
“Exploration is where Mexico can make
the hydrocarbons sector is essential to the
best use of its resources,” Cochran said.
association. We aim to make the oil and gas
Allowing new discoveries to add to the
business a pillar for development in Mexico,”
country’s oil and gas reserves is paramount.
said Cochran.
Private industry plays an important role here: “Private operators assume all exploration risk and contribute benefits for Mexico regardless
“The investment executed so far by Mexico’s oil and gas operators is equivalent to two Mayan Trains.”
Merlin Cochran General Director of AMEXHI
of whether or not they find oil,” he continued. Especially in the area of offshore exploration, Mexico can be found at the global vanguard due to its accomplishments. “Mexico has been an international success case for the past years,” explained Cochran, emphasizing its strong comparative competitiveness. The country has drilled 21 offshore exploratory wells, nine of which come from private
AMEXHI reported that investment in the
players. This means that Mexico beats even
hydrocarbons has picked up after a difficult
the US. As of May 2020, oil contracts already
2020, adding US$1,44 billion in the timespan
assured a production of 65.24mb/d. The
of one year. US$41,86 billion in investments
bidding rounds, contract migrations with
have been approved so far, of which US$17,5
partners and farmouts have all contributed
billion have already been carried through.
to this production.
“The investment executed so far by Mexico’s oil and gas operators is equivalent to two
“There is certainly a lot of uncertainty, but the
Mayan Trains,” Cochran illustrated.
results are there,” Cochran said. “And if there
11
C on f e r ence H ighlights are results, this means that both operators and
were discovered in the past year that could
the government are working hand in hand.”
help stop the decline in production. “If we
Of these positive results, Cochran highlighted
consider that the majority of contracts, 61
that in May 2021, oil production had increased
percent, are still in the exploration phase,
by 38 percent compared to production at
this is really only the beginning,” concluded
the end of 2020. Oil and gas production
Cochran. Even excluding the important Balam
remains the second most important industry
field, Mexico could be producing 280 mb/d of
contribution to Mexico’s GDP. 6 new oil fields
oil and 355 mscf/d.
READING BETWEEN THE LINES OF MEXICO’S NEW ENERGY POLICIES Given the relative degree to which Mexico’s
Law, 700 protections in the energy sector,
regulatory framework for its oil and gas
a decree from SAT regarding imports and
industry has remained consistent throughout
exports of fuels, the announced creation of
last year, conversations about its context
Gas Bienestar, the attempted Electric Reform
cues and the future is what dominated
and SENER’s recent decision regarding the
the first panel of Mexico Oil & Gas Summit
unitization of Zama.”
2021, entitled “Mexico’s Evolving Legal & Regulatory Landscape”.
The first panelist to comment was Yolanda Villegas , Founding Par tner at O leum
The panel was moderated by John Padilla,
Servicios y Dictaminaciones. She began by
Managing Director of IPD Latin America,
explaining the context for the current legal
who began his remarks with an analysis of
circumstances beginning with the first cases
the macro global context that had impacted
of COVID-19 being reported in China, which
the industry’s legal circumstances over the
had an immediate impact on oil product
last year. This included the fluctuations
demand at a global level. Villegas said this
in demand and prices that the pandemic
was the main catalyst for everything that
created , coupled with the increasing
was to follow because from this event came
urgency of the energy transition expressed
a chain reaction or a domino effect that led
by the US Presidential election of Joe Biden.
to everything else. Regarding the legislative
Padilla balanced these contextual elements
initiatives that have taken place in Mexico
considering recent and nationally specific
throughout 2021 to change the energy
ones such as the results of Mexico’s midterm
sector’s regulatory framework, Villegas
elections. Padilla combined these into a list
highlighted the impact of the midterm
of eight main factors that he identifies as
elections, saying that “constitutional reforms
the main drivers of change in the industry
have become less likely after the midterm
at this current time, which were, in his own
election due to the difficulty of forming the
words, “the cancellation of the asymmetric
necessary coalitions; however, we can expect
regulation in natural gas, modifications to the
that the attempt will be made nonetheless.”
permits of imported and exported energy products, changes to the Hydrocarbons
Panelist David Enriquez, Senior Partner at Goodrich, Riquelme & Asociados, agreed with Padilla on the importance of Biden’s
“Mexico has an energy deficit, which is
election as a catalyst for the acceleration
what the new energy reform tries to fix. It
of the energy transition, which reshapes
wants PEMEX to watch over companies
all incentives in the global energy market.
working in the country.”
Enriquez made a particular emphasis on
Rafael Espino de la Peña Founding Partner of Fernandez, Espino & Asociados and Independent Adviser of PEMEX
how the energy transition influences the way in which banks and institutional investors behave in relation to the oil and gas sector. In the case of Mexico, Enriquez coupled this international context with his personal
12
C on f e r ence H ighlights estimation that “all of this government’s
such as the CRE, but that that does not
energy sector policies have been regressive
mean that they will not happen in the future.
and inconsistent with Mexico’s climate
Enríquez also identified weaknesses in the
change international agreements, not
institutional design of the sector as decreed
to mention international climate change
by the Energy Reform, since the events of the
targets.” One of the examples that he used
last two years have made it clear that policy
to illustrate this evaluation is the way in which
makers do have the capacity to disrupt the
CFE power plants have reversed course in
normal functioning of regulators, which in
terms of phasing out fuel oil since they are
theory should not be possible. Enríquez
now taking in more of this commodity than
reported that in the upstream sector, most of
previously accepted and being reconverted
the private operators’ projects are currently
to take in even more in the future, a
in an exploratory phase but that general
process that in Enriquez’s view damages
activity in this sector is mostly focused on
the plants, while also challenging global
extraction, so it is worrying to see the fragile
environmental trends.
case of Zama discouraging future investment and possibly becoming a benchmarked
A counterpoint to this critical perspective
criteria that will be extended to other similar
was presented by panelist Rafael Espino
situations. In this regard, the question for
de la Peña, Founding Partner of Fernandez,
investors becomes, how to trust SENER’s
Espino & Asociados and Independent
standards to be objective.” This becomes,
Adviser of PEMEX, who said the political
in Enríquez’s view, an additional concern for
handover that occurred in 2018 has to be
investors who are already being kept up at
understood in terms of its broad mandate
night by the industry’s debt situation. He also
and its desire for institutional changes that
made it clear that the question of contractual
strengthen PEMEX and provide Mexico with
rights was a tricky one because “solving
energy sovereignty in addition to energy
problems in court is not a healthy standard
policies that generate wider collective
or expectation for any industry to adopt.”
benefits through more ethical processes. He mentioned the currently increasing price of oil
Villegas agreed with Enríquez’s points, adding
as an example of accomplishments achieved
that legal battles over contractual terms were
by current policies, given the positive impact
usually long-term affairs that put all future
that it will have on PEMEX’s operational flow.
investment in jeopardy and turned current
“Mexico has an energy deficit, which is what
investments into a conflict over damages
the new energy reform tries to fix. It wants
and pending payments. She also addressed
PEMEX to watch over companies working in
Espino’s statements by saying that political
the country,” said Espino.
policies are not necessarily inherently positive or negative in ethical terms, but instead
In regards to the kind of tools industry players
have to be understood in terms of their
have to protect their legal and contractual
results. “More than 40 percent of COFECE’s
rights, Enríquez stated that in the upstream
investigations are in the energy sector. This
sector he has yet to see the more “radical”
tells us something. We have to establish
approaches to policy changes that occur
better communication with the government
in the downstream sector or in regulators
to attract investment,” said Villegas.
13
C on f e r ence H ighlights PRIVATE OPERATORS’ PRODUCTION PLANS Mexico’s most important private offshore
plans. He commented that today’s scenario
operators were struck by the pandemic at
is based on the events of 2020, when the
a decisive moment. Some had achieved or
industry was already facing low prices, and
were close to achieving an early production
soon after, COVID-19 took center change
stage relying on their field development
and changed the way they operated. “We
plans. While COVID-19 caused delays in
had to update our offshore operations, while
some production start dates in 2020,
still developing an offshore campaign.”
operators continued to stride forward
Brügmann explained that having over 6,000
with their production goals. Reaching
people offshore became harder to manage,
a production phase brings additional
as the entire world faced situations like the
questions regarding commercialization,
borders closing. “Over a year after the
operational efficiency, and even further
pandemic started, operators have learned
exploration. It will also come with hard
how to cope and vaccination has helped,
choices in terms of investment volumes and
however, we should keep the guard up.”
the valuation of assets. Mexico Oil and Gas
Brügmann said that the industry has to
Summit 2021 presented the panel “Private
learn how to deal with COVID-19, but that
Operators’ Production Plans” on July 14,
this is based on intensive testing prior to
where experts of the industry aimed to
embarkation, during and randomly. “To date,
clarify the kinds of variables that operators
prices are also coming back, which is the
are dealing with while approaching the
reflection of the reactivation of economic
production stage.
activity, thus we see a bright future for our industry,” said Brügmann.
“Oil companies have had to deal with the new reality of the pandemic and have
Sylvain Petiteau, Vicepresident Reservoir,
managed to attract new talent. We continue
Development, Engineering Non-operated
to adapt to the new opportunities and
Assets at Wintershall Dea México added that
challenges,” said Schreiner Parker, Senior
during these changing times and based on
Vice President & Head of Latin America
the length of the projects of the industry, the
of Rystad Energy and moderator of the
adjustment on onshore production operations
panel. Even the few operators who might
is critical. “The time frames of each project
already be producing on some scale, are still
asks of us to be reactive, which for instance,
wondering about the timing of their next
this is something we can do at our Ogarrio
step; maximum advantage must be taken
project, as Wintershall Dea operates directly
in every each decision to expand outputs
from the country we have activities.”
in a way that generates the most benefits when combined with market forces.
In addition, Petiteau addressed SENER’s unification of Zama oil field to be shared
Andrés Brügmann, Country Manager Mexico
b et we e n th e Z a m a fi e l d , d i s cove re d
of Fieldwood Energy made a recap of the
through Contract CNH-R01-L01-A7 / 2015
events currently shaping private operations
in charge of Talos Energy Offshore, and the assignment with number AE-0152-Uchukil
“To date, prices are also coming back, which is the reflection of the reactivation of economic activity, thus we see a bright future for our industry.”
whose ownership is a cargo of PEMEX. On May 2020, Wintershall Dea announced two significant oil offshore discoveries on the Zama oil field.
Andrés Brügmann
“Zama in particular has different parties
Country Manager Mexico of Fieldwood Energy
operating and is not easy to align, however, despite the disagreements, we have to recognize all stakeholders need to define
14
C on f e r ence H ighlights a plan to keep maturing this project, which
and thus continue drilling our Ichalkil-6 well.”
will not bring production in 2021. We need
The more data, the better the certainty to
to mature partnerships to have the common
locate future wells.
goal of the project.” Important changes on capital market are Petiteau continued by saying this project
also happening, according to Brügmann.
required large investment, which means
“ Th e a uth orities a re stric t re ga rding
more stakeholders in the project, which
governance and transparency, there are
raises the complexity. This, assimilating the
also additional requirements related to
data of the platforms after they are build is
IFC, with social activities and community
essential for this and every project. “Zama
relationships, which is a significant change
is an example of the significant value of the
with the past model of Mexico.” He also
profit, the investment has been very large.
said that ESG standards are something oil
We need to see the whole picture, from
regulators should put at the top of the list,
the results of the first wells, we can have
as it could generate a positive change in
an idea of how the others will develop, but
the industry.
everything has to be on the most optimum time frame.”
Petite a u co m ple m e nte d th e ch a ng es happening with the relevance of good
Alligne d with Petiteau commet s was
stakeholder management, “without it,
Brügmann’s comments on the time scale
a project cannot happen. Taking all the
of the projects. “The execution today
parts that make up a project into account
was planned 5-10 years ago. For instance,
is necessary for it to be successful.” He
Fieldwood, is seeing the results from 2015,
added that long term view of things, is
from all those years on investing and
critical when going into a country that has a
planning. We are just starting commercial
changing environment, such as Mexico with
market next month.” He said the company
the Energy Reform. “Everyone working on
has a project on Phase 2, which is ramping up
this industry has the same goal: develop a
the production of the fifth largest research
project and collect resources, but this is not
field, “there is a lot of activity that will take
an easy task.”
more than US$2 billion dollars of investment.“ Parker recapped the pipeline of development Brügmann also presented the importance of
and planning for private operators, as asked
geological understanding, which will inform
the experts about the incoming challenges
for future drillings. “In 2017 we began wells
they see in Mexico. For Brügmann these
for our Cretaceous and Jurassic fields. “The
are two: technical and regulatory. “On the
structural design of the wells required for
technical side, drills are complex and deep,
our objectives is quite complex. During
almost 6 km in high temperature and varying
2021 we expect to complete four wells (our
pressure. Regulation wise, for projects
original two appraisal wells and our two
that are doing things for the first time we
development wells), bring production online
become pioneers.” He used the example of Fieldwood being the first company to sell
“We need to see the whole picture, from the results of the first wells, we can have an idea of how the others will develop, but everything has to be on the most optimum time frame.”
Sylvain Petiteau Vicepresident Reservoir, Development, Engineering Non-operated Assets at Wintershall Dea México
oil for the Mexican market, the first on the new regulation of wells, the first one to lay a pipeline with a single campaign, the first operators to lease the Tumut platform from PEMEX, and the first offshore lease in Mexico ever. “However, there are a lot of synergies among layers. Operators do not complete developing the fields, we work together to find solutions.” Lastly, Petiteau added that within the collaboration of the industry, “we
15
C on f e r ence H ighlights cannot be naïve, and must have the goal
reserves, “we need to continue pushing and
of the project very present, because that is
helping PEMEX as it is the largest operator
shared by all the stakeholders.”
in Mexico, the resources of the country are much larger than PEMEX capabilities,
Brügmann closed by saying that private
which is where the private sector comes
operations can focus on the potential of
to support.”
ASEA’S REGULATIONS IMPROVE SAFETY IN A RISKY INDUSTRY The implementation of health and safety
addition to respecting regulations and the
measures in the industry, especially during
environment.”
the pandemic, was not only the result of internal efforts, but also of external changes
In 2020, the COVID-19 pandemic affected
that came from regulators . Jose Luis
the tasks performed by ASEA as it was
Gonzáles González, Head of the Supervision,
difficult to go to the different facilities for
Inspection and Industrial Surveillance Unit
inspections. Fortunately, ASEA’s capacity
at ASEA, presented the panel “Industrial
has increased, as it has learned to work
Safety Performance and Priorities” at
despite the pandemic. ASEA’s regulation,
Mexico Oil and Gas Summit 2021, in which
inspection, supervision and surveillance
he highlighted the role of regulators such as
depar tment s were able to suppor t
ASEA in improving compliance and safety
operators throughout the industry value
within the hydrocarbon industry.
chain to ensure no accidents or business interruptions occurred.
National Industrial Safety and Environmental Protection Agency (ASEA) is one of the
“We began adopting online modalities
youngest agencies within the sector. It
and receiving all the training necessary to
was created in 2015 and is in charge of
manage them. These efforts allowed us to
disseminating related regulations and
continue operating, executing evaluations
enforcing compliance for public and private
and issuing authorizations. Now, these
sector companies in the hydrocarbons
online modalities are quotidian and, for the
in d ustr y. “ We c a rr y o ut sup e r visio n ,
most part, we have been able to maintain
inspection, surveillance and verification so
a reasonable continuity in our operations,”
that all activities related to the hydrocarbon
González told MBN.
industr y can be carried out safely, in ASEA implements corrective, urgent and safety measures based on the status of the inspected activities and facilities. Corrective measures are usually minor infractions that do not put staff at risk; urgent measures are a priority due to their possibility of causing accidents; and security measures are to prevent accidents.From 2017-2021, the corrective measures have been the most implemented. However, there is a downward trend due to multiple requests for supervision that have allowed companies to better understand the regulation. The implementation of urgent measures also follows a downward trend, while security measures have remained at a similar level since 2017. “We are modifying a number of industry norms that we inherited from previous
16
C on f e r ence H ighlights administrations, since their timeframes need
which the company has 180 days after the
to be adjusted,” said González.
event to deliver it. “We do not sanction. We promote compliance with regulations
ASEA also carries out inter-institutional
and support companies in the event of
operations to combat illicit hydrocarbon
an accident. Our purpose is to learn to
trafficking, in which it works in conjunction
prevent accidents.”
with PROFECO, CRE, the National Guard, SEDENA and the Navy. From 2019-2021,
In 2020, there was a significant increase
ASEA has worked in 21 states across Mexico,
i n a ccid e nt s . I n th e co m m e rcia l a n d
carried out inspections in more than 125
transportation area, accidents increase by
facilities, made 34 temporary closures,
70 percent due to the closure of multiple
suspended 21 temporary activities and
pipelines and the different risks posed
implemented 55 urgent and corrective
by the types of transportation. However,
measures. González explained that during
ASEA continues to address these issues.
2021, ASEA’s activities in Hidalgo have
“Since April 2021, ASEA has been on a
intensified as it is a priority state in the fight
communication campaign to share lessons
against illicit trade.
learned from the latest incidents in the sector, which include major accidents in
“We carry out supervision, inspection, surveillance and verification so that all
hydrocarbon transportation and storage,” said González.
activities related to the hydrocarbon
Recently, there was a controversial accident
industry can be carried out safely, in
in Campeche called an “eye of fire,” in which
addition to respecting regulations and the
an underwater gas leak caused a fire on the
environment.”
ocean surface. During his presentation,
Jose Luis Gonzáles González
González said that he wanted to clarify
Head of the Supervision, Inspection and Industrial Surveillance Unit at ASEA
some facts that have been incorrectly reported. On July 2, a leak in an underwater pipeline and fire on the ocean were reported at 5.15 am, for which safety protocols were activated, resulting in the extinction of the
Regarding incidents and accidents, ASEA
fire at 10:45 am.
has classification criteria that depend on the magnitude of it. Type 1 is for accidents where
According to González, there was a loss
personnel were injured, there were damages
of containment in the gas pipeline, which
to the facilities and failures in the operation
released gas. However, weather conditions
of the equipment; Type 2 is for when
in the area are believed to be the cause
the accident caused fatalities, disrupted
of the fire. Af ter the accident, PEMEX
operations, and hazardous material was
identified and reported the event as Type
released within the facility; and Type 3 is
3 and in accordance with ASEA protocols,
for when there was a death, the personnel
PEMEX must submit a report of the event
and the population had to be evacuated,
and its cause within 180 days.
operations are interrupted and a dangerous substance was released outside the facilities.
G onzález concluded the panel by highlighting that ASEA’s priority objective
For these situations, there is the Root
is to strengthen supervision, inspection and
Cause Investigation (ICR) process, where
surveillance in the hydrocarbon sector to
th e co m p a ny m u s t re p o r t th e eve n t
maintain the safety of processes, people,
and classify it according to its severity.
environment and facilities. “We work with
Subsequently, the situation is also analyzed
a model based on lessons learned, ICR
by ASEA, which makes recommendations.
recommendations, and measurements we
At the end, a final report is presented, in
make during inspections.”
17
C on f e r ence H ighlights ADAPTING TO SEVERAL STORMS OF CHANGE ALL AT ONCE Between the pandemic and the
perspective as a trainer of current and
government’s efforts to modify labor laws,
prospective industry employees, saying
the human resources and crewing segment
that their first reference as an international
of Mexico’s oil and gas industr y have
company became WHO recommendations,
navigated a treacherous route for the last
which became a useful tool to stay ahead of
12 months. The lessons they have learned
the curve as Mexican authorities developed
throughout this journey were touched
their own protocols. Relyon Nutec was
upon in the third panel of the first day of
one of the industry’s innovators when it
Mexico Oil & Gas Summit 2021, entitled
came to the adoption of digital practices
“HR, Outsourcing and Safety: Crewing the
for safety training purposes, which proved
Industry in 2021”.
crucial to improving the safety standards among offshore workforces. “Hygiene,
Th e p a n e l wa s m o d e rate d by Raf a e l
social distancing and protection measures
Daryanani, Regional Manager of Mexssub,
are important training elements to ensure
who explained the circumstances of the
safety amid the pandemic,” said Heras.
industry during 2020: “Mexico suffered an economic recession during the pandemic
While Heras focused on the certainty of
which affected all industries, but even within
his company’s response, panelist Daniela
that context, there was particular confusion
Nava, Human Resources Manager of Vopak,
in the oil and gas sec tor.” Dar yanani
focused her response on the prevailing
further explained the efforts the Mexican
uncertainty that characterized this period
government has made to modify existing
and how her company addressed it. Nava
labor laws with the objective of limiting
made clear that the question of their
outsourcing schemes, which added to this
strategy to face the pandemic has a variable
confusion and compounded the stress
answer because such strategy has changed
being put on human resource managers
quite frequently, especially during the first
and the larger recruitment sector within the
months of the pandemic. A lack of relevant
industry. Throughout all of this, Daryanani
information was common during this
commended the essential role that the
time, so developing leadership qualities
HR sector played in allowing the sector to
that were more general and adaptable
maneuver through these troubled times
among employees became crucial. Crisis
successfully, adding that “leadership from
management training became necessary
companies has been crucial in ensuring the
and common. The high unemployment
safety of human resources in the oil and gas
rate was creating new anxieties among
industry.” He began the panel discussion
the workforce, therefore, Nava explained
by asking panelists to characterize what
that Vopak’s human resources department
their experiences were as they tried to
focused on making sure that the
guarantee the safety of employees amidst
company’s employees would know that
the pandemic.
all payroll promises would be kept and that everybody’s work was appreciated;
Panelist Christian Eduardo Heras, OPITO
these efforts would come to significantly
Coordinator of Relyon Nutec, offered his
strengthen the organization as a whole. “We learned a lot during the pandemic.
“...leadership from companies has been crucial in ensuring the safety of human resources in the oil and gas industry.”
Pretty much everyone became an expert in safety protocols, which has helped to keep everyone safe,” said Nava.
Rafael Daryanani
Panelist Guido Van der Zwet, General
Regional Manager of Mexssub
Manager of IPS Powerful People, also highlighted that all companies that worked
18
C on f e r ence H ighlights in more than one state had to contend with
Nava did admit that these legal changes
a variety of standards and attitudes from
made a lot of institutional processes take
public authorities when trying to adapt to
much longer, since decisions now needed
pandemic rules. This had a particular impact
to be approved from the perspective of
on offshore crewing and activities, since
more stakeholders; for example, STPS was
necessary quarantine measures for vessel
now taking a closer look at all the moves
crewmen drastically altered the logistical
that companies were making to formalize
preparations and timeframes of operators
all their employment arrangements. As a
and other clients of companies like IPS
result, all timeframes have been extended
Powerful People. Van der Zwet believed
and extensions of deadlines have been
one of the decisive success factors during
sought from public authorities.
the pandemic was the ability of recruitment agencies and human resources consultants
Van der Zwet believed that the limiting of
to find practical solutions in tight deadlines
outsourcing could actually have a much
to each problem that arose, especially since
larger and more complicated impact than
oil and gas was a critical industry for Mexico
Nava’s claims would suggest, especially
that was not able to halt its operations. Van
since payroll departments “do a lot more
der Zwet hopes that this can-do attitude can
regulatory compliance work than everybody
remain applicable as Mexico moves into the
thinks; they are doing much more than simply
third wave of COVID-19 infections. “We will
calculating salaries, and in many companies
continue to learn more about how to handle
their importance is underestimated.” Van
the third wave of infections. People have to
der Zwet characterized the “prohibitive”
adapt and follow instructions as they move
approach to outsourcing reflected in recent
forward,” said Van der Zwet.
regulatory changes as “radical”, but he also understood it within a broader historical
Daryanani concluded that institutional
context, explaining that “Outsourcing
flexibility was crucial to surviving the
has been a bit of an ugly word in recent
p a n d e m i c , w h i c h l e d th e d i s c u s s i o n
years, associated with dirty practices like
tow a r d s t h e q u e s t i o n o f r e g u l a to r y
reducing salaries and preventing payments,
changes. Nava believed that the impact of
even wage theft. However, there are many
limiting outsourcing was relatively limited
outsourcing companies that follow the rules
for companies with a high degree of
and pay well, including benefits.” Van der
established presence in Mexico. “For large,
Zwet claimed that out of all outsourcing
well-structured companies, the changes
companies that operate in Mexico, most
in outsourcing regulation will not be a big
pay one hundred percent of salaries, which
deal. This will affect smaller, family-based
in the oil and gas industry are quite high
companies much more,” said Nava. However,
in general.
19
C on f e r ence H ighlights RESULTS-FOCUSED EXPLORATION TECHNOLOGY INNOVATION While certain sections of the industry had
companies did not invest on development
to adjust to the events of 2020, exploration
and training of human resources.
activities experienced a positive period. PEMEX and private operators made a
“Training of personnel combined with
number of impor tant discoveries and
adequate technologies are the key to
prominent exploration and drilling plans
s u cce s s i n exp l o rati o n e ff o r t s ,” s a i d
were approved by CNH.
Eduardo Arriola, Operations Manager at Golfo Suplemento Latino. Arriola explained
These results need to be deeply understood
that much of the use and advantages of
if they are to be replicated. It is important
technologies have to do with the experience
to highlight that that successful exploration
of a talented Mexican workforce.
campaigns are a collective effort, and that innovation and new technologies can play
The role of technology in the sector has
a significant role in any number of the many
evolved from 2D Seismic Data Software,
processes that make up such a campaign.
to 3D Seismic Data Software and to 3C4D Seismic Data Sof t ware, said G erardo
“Mexico has more than 70 years in extraction exploration and has incorporated exploration software.”
Clemente Martínez, President of AMGE. “These have allowed us to generate a knowledge base that we can transmit, to have more conscious operations focused
Jeimy Mathison
on optimizing times.” In line with Arriola’s
General Director of Kasoil
comment, Clemente said that there are people who are familiar with these software models that govern the geological evolution of the areas, thus they are considered the
To understand the surveying of increasing the
real advantage for an innovative company,
data generated through drilling, and even the
as without them, innovation would just
importance of more traditional and analogue,
exist, but would not be used. Clemente
but still extremely relevant processes, such
also recognized that while the oil industry
as rock core sampling and analysis, experts
has contracted as a result of the pandemic,
met at Mexico Oil and Gas Summit on July 14
private companies are still open to hiring,
and presented “Results-Focused Exploration
“it is important to create quick hiring
Technology Innovation.”
mechanisms so that people do not lose their skills gained in the sector.”
Moderator of the panel, Gustavo Hernandez, International Vice President of the Mexican
Arriola said that this contraction also helped
Union of Engineering Associations (UMAI)
the industry to refocus their efforts and stick
kicked off the discussion by asking the
to collaboration toward achieving the set
experts about the current role of technology
strategies for exploration success. He added
for extraction activities.
that the pandemic taught the industry to work with different budgets, “whether
“The technology allows mitigating risks
limited of sufficient, our budgets will tell us
in the oil extraction chain,” explained
what we can do and in which areas we can
J e imy M athiso n , G e n e ra l D ire c to r of
assign it, however, availability of equipment
Kasoil. “Mexico has more than 70 years in
and technology, workforce, and money must
extraction exploration and has incorporated
converge to have the true skills of success
exploration software, it is the starting point
for our campaigns.” Mathison added that
in the production chain to reduce risks,”
Mexico has unique geological conditions,
Mathison added. However, she said that
which makes the trained workforce of the
all of this technology would be useless if
country even more valuable.
20
C on f e r ence H ighlights Focusing on the impact of innovation on
she said that it is always important to carry
their campaigns , Clemente presented
out sequence studies and evaluate projects
other key aspects for exploration activity,
to reduce uncertainty and to meet their
“companies have to know how to select the
goals as well.
technology they need, it must be consistent and tailored so that it works precisely for
In regards to further innovation in the
what they want it.” He said that, just as the
industry, Arriola sees technology as a
workforce, technology has to respond to the
constant evolver, therefore, “if a new
specific conditions of Mexico. “In AMGE, we
paradigm shift occurs it will likely use the
take good technological experiences and
same technology, but feature different
tropicalize them to fit out needs.”
models that manage to optimize results.” Clemente believes that digital information
The use of data is also a watershed for
will allow standardization of data and
operations, Mathison explained that “drilling
provide a better access to the information
a well is the result of much analysis and
in the way companies need it, “it would
specialized studies that allow timely decision
also make it easier, from home, from our
making, these processes allow operators to
cell phone in a simple way to support
achieve geological and commercial success
decision-making.”
to maximize the value of the hydrocarbon.” Thus, Mathison encouraged companies
Mathison concluded that technology will
to continue working sequentially, “ the
also begin to optimize the time of human
difference that the bit makes a mistake
hours and machine hours, therefore, studies
is associated with the studies that we are
of 3 to 6 months can be shortened to
doing to guarantee operational success”,
something more immediate.
BHP MOLDS MEXICO’S FIRST DEEPWATER DEVELOPMENT WITH TRION The Trion project, discovered by PEMEX
are also fully committed to environmental
in the deepwaters of the Gulf of Mexico
safety, decarbonization and social values.
in 2012, is considered one of the most
We want to leave a positive legacy and
exciting prospects in the Mexican oil and
support communities,” said Drouaud.
gas sector. Stephan Drouaud, Director of the Trion project at BHP, outlined the project’s
With the Trion field, BHP hopes to display all
history and progress in Mexico Oil and Gas
these values. The company is the operator
Summit 2021.
and has a 60 percent operating interest, the other partner is Mexico’s NOC PEMEX
BHP might be mostly known for its global
with it a 40 percent share. “PEMEX’s original
mining experience, but its oil and gas arm
discovery of the field meant that we had a
displays its excellent capabilities of its
lot of available data to work with when we
own. More than just being a technological
first became involved in Trion,” Drouaud
powerhouse, the company is keen to show
further explained.
how its projects can add value anywhere. “ I n te g r i t y, r e s p e c t a n d o u t s t a n d i n g
The field is quite unique,” Drouaud said.
performance are crucial for the company. We
The Trion’s field remote location makes it a quite exceptional and challenging project,
“Our goal is to think big and make history by delivering the first deepwater development in Mexico.”
with a unique scale and magnitude that we find very exciting,” he continued. Trion is located 180 km off the Mexican coastline, 30 km from the south of the US and Mexico’s
Stephan Drouaud
maritime border. Ninety-four percent of
Director of the Trion project at BHP
the field is oil, the project’s most valuable resource. With no nearby infrastructure,
21
C on f e r ence H ighlights BHP faces an interesting challenge in their
field is estimated to cost between US$7
field development plan concept. “We have
and 10 billion, but the partners are trying to
now defined the development concept as
narrow this range. “I hate to say it, but 80
one that calls for a subsea field connected
percent of these projects do not deliver on
to a semi-submersible Floating Production
budget and on schedule,” he said. Drouaud
Unit,” said Drouaud, adding that “ the
has asked for more time to do everything
reservoir requires pressure support from
the right way in his mission to ensure Trion
day one so that the oil does not become
will be a landmark success.
gas too early.” Another key part of the development is the Drouaud predicts that the field could
Floating Production Unit (FPU) contract, for
produce 100,000 b/pd, increasing up to
which BHP decided to work with McDermott.
120,000 or even 130,000 eventually. Most
“ T h i s d r i ve s p re t t y m u c h th e w h o l e
of the gas produced will be re-injected.
project, so it was incredibly important,”
“We were struggling to find a location to
Drouaud said. The core foundation of the
exporting the gas,” he said. Luckily, the
project success lies within the power of
field can use this resource itself. “The need
collaboration, however. Drouaud lauds its
for water and gas injection has driven
successful cooperation with PEMEX, which
an important number of our design and
he says has been built on “trust and respect”.
engineering decisions in the development
Aligning business and project objectives
of Trion.”
early on and developing relationships on all levels in their respective organizations
Trion is showing good progress in its study
helped build a bond. “Treat your partner
phase, with CNH approval already expected
the way you want to be treated,” he stated.
in 2022 and a likely successful second investment decision coming soon. Various
A transfer of technology and knowledge
milestones such as finalizing the field
fur ther strengthens the par tnerships .
development plan and tendering important
BHP said it benefits greatly from PEMEX’s
scopes of the project will be completed
knowledge and capabilities, so it wanted
in 2021. BHP is ambitious: “Our goal is to
to transfer its technology and know-how
think big and make history by delivering the
regarding deepwater developments to
first deepwater development in Mexico,”
PEMEX and academia as well. “It is not an
explained Drouaud. On the current timeline,
obligation, but a commitment because it is
the company hopes to reach first production
something we really wanted to do. In a way,
in late 2025 or early 2026. Developing the
it underpins our success,” said Drouaud. Developing the capabilities of Mexico’s oil and gas sector as well as supporting university research are dedications BHP is proud of. “We believe that we are a proven operator in the Gulf of Mexico, so we can provide a lot of expertise in the training of Mexican talent.” With a solid social program on its shoulders, BHP aims to use donations to build goodwill with Mexican communities and establish a great relationship early on. Its efforts include poverty relief, training, health care services and laptop donations, among others. “We are entirely committed and excited for the bright future ahead of us,” Drouaud decided.
22
C on f e r ence H ighlights POTENTIAL SURPASSES CHALLENGES IN DEEPWATER For many years, the speculative nature
been in the Perdido fold belt area, but have
of deepwater development in Mexico
not been exclusively limited to it, since the
has rendered discussions surrounding its
Salinas basins can also be included as a
potential into somewhat vague and even
prominent area.
at times repetitive musings, nevertheless, the latest results from operators in this
A n o p e ratio n a l ro l e wa s d et a il e d by
category has generated a renewed interest
panelist Carlos Ortiz Reguer, Chairman for
for this type of activities. Appropriately,
IADC at LATAM and Marketing Director
the new balance between opportunities
for Transocean, who narrated the history
and challenges ahead for this subsector
of his company’s involvement in Mexico’s
was the main subject of discussion during
deepwater sector. Transocean broke ground
the last panel of Day 1 of Mexico Oil and
by bringing in their Deepwater Invictus
Gas Summit 2021, titled “Deepwater: Who,
vessel to develop deepwater assets in
Where and When?”.
Mexico, which drilled a number of important wells in the Trion asset, among them the
Th e pa n el was mo de rate d by Vale ria
first ultra-deepwater well in the country’s
Vázquez, Energy and Resources Leader for
history. “Transocean has been instrumental
Mexico and Central America at Deloitte.
in th e te ch n ologic al d eve lopm e nt of
She began by establishing the richness
Mexico’s deepwater from the beginning,”
of deepwater resources in the Mexican
said Ortiz Reguer.
side of the GOM, only matched by their unexplored nature. There is a notable lack
Panelist Chris Brinzer, Exploration Manager
of knowledge and geological data when
for Petronas, highlighted their role as
compared to the American side, despite
an NOC that contemplated Mexico as a
th e fac t that th e M exic an side might
worthwhile international investment. As
prove to have much more potential. With
a 100 percent state owned oil company,
this in mind, Vázquez began by asking
Petronas has to evaluate its international
panelists what role they have each played
portfolio through specific criteria, and the
to contribute to the further growth of this
fact that Mexico has not only fit that criteria,
breadth of knowledge.
but become a key part of that portfolio, has gone a long way towards promoting
P a n e l i s t D r. A l m a A m é r i c a P o r r e s ,
investment in this particular segment of
Commissioner at CNH, explained the role
Mexico’s oil and gas industry, according
the Commission has played as a regulator in
to Brinzer. “Mexico is very important to
incentivizing the recent exploration success
our international portfolio, as we believe it
that deepwater operators have enjoyed.
has significant exploration and deepwater
“Since 2019, operators have explored 11
potential.” In fact, Brinzer claims that
prospects and discovered resources in 5
Mexico, represents the largest exploration
wells in the southern Gulf of Mexico. This
portfolio for Petronas’ international assets.
demonstrates a 45 percent success rate,” said Porres. Most of these discoveries have
This question of asset evaluation was also brought up by panelist Luiz Feijo, Director of
“Since 2019, operators have explored 11 prospects and discovered resources in 5 wells in the southern Gulf of Mexico. This demonstrates a 45 percent success rate.”
Global Offshore Production at the American Bureau of Shipping or ABS. Feijo explained that, in his experience, the criteria used by operators to determine which asset to develop was extremely complex, but that
Dr. Alma América Porres
safety has always been at the top of those
Commissioner at CNH
priorities, and Mexico has fulfilled those expectations. “Profitability is important, but
23
C on f e r ence H ighlights you cannot risk the safety of your people
include improved imaging of complex and
or the environment.” He also mentioned
subsalt structures and the use of full wave
that as deepwater activities continued
inversion to better understand resources
their progress towards a productive phase,
located below salt formations. These kinds
many elements had to be considered by
of exploration applications can also help
operators when it came to determine what
operators understand the difference in
kind of production facilities they would
reservoir pressures, which can sometimes
be working with. These factors include
make data interpretation much more difficult
the type of storage they would need, the
according to McGuire. Brinzer agreed with
choice between offshore processing and the
McGuire, adding that the amount of data
use of pipelines and underwater ducts, the
that has been made available through these
kind of weather they would be dealing with
and other exploration technologies, such as
(which in the GOM means contending with
wide azimuth seismic, has been decisive in
hurricane season), the expected longevity of
the success of operators.
the assets, and the way in which technology wo u l d b e a p p l i e d to i n te g r it y a s s e t
Regarding technological challenges, Ortiz
management and the mitigation of risk.
Reguer explained the new hardware that has become common in deepwater vessels
Panelist Bud McGuire, Mexico COO of Alpha
and platforms, which in some cases includes
Deepwater Services, also noted Mexico’s
co m p o n e nt s o rigin a lly d esig n e d a n d
deepwater richness in the context of the 12
developed for use by NASA space shuttles.
years that his company has spent developing
This included a number of robotic and AI-
deepwater assets in Mexico working together
based applications that removed the need
with PEMEX and witnessing those prospects
for human intervention and interpretation in
mature up close. “Mexico has world-class
certain high-risk areas of work, adding that
deepwater potential, most of it remains
“robotic consistency enhances efficiency
unexplored. This is a great opportunity to
which translates to big cost savings.” In
use new technology to improve drilling.”
general, Ortiz Reguer expressed enthusiasm
This led to the question of technological
about the technologies being developed.
challenges and applications that this
“There are new technologies that offer great
categor y of activity represented, and
economic and efficiency advantages. The
here McGuire highlighted the importance
key to success in these investments is having
of the latest seismic technologies, which
a long-term commitment.”
NEW URGENCY FOR AUTOMATION & REMOTE OPERATION AFTER COVID-19 In every industry the adoption of various
implemented at great speeds to ensure their
technologies became essential for business
activity. For the oil and gas industry, this
continuity during the COVID-19 pandemic.
was no exception. Currently, technology
During the first three months of confinement,
has been integrated into a cost saving
due to the sanitary restrictions, the digital
processes, decision making support and
transformation for all companies had to be
greater operational efficiencies, however, this transition was taken step by step.
“It is not just adopting technology; companies need to mature the way we use it and have a coherent integration of processes.”
Manuel Arroyo Industry Solutions O&G Director of Emerso
Today, the urgency for automation and remote operations faces other challenges beyond its adoption, where experts of this industry presented during Mexico Oil and Gas Summit on July 15. D u r i n g th e p a n e l “ N ew U r g e n c y f o r Automation & Remote Operation After
24
C on f e r ence H ighlights COVID-19” moderator Amanda Duhon,
Regarding the next step of technology
Regional Director for North & Central
adoption and integration, Augusto Borella
America at Energy Industries Council
Hougaz, Vice President of O&G Products
asked about the role of automation and
at Intelie said that more sensors and real
re m o te o p e r a ti o n a n d h ow th a t h a s
time screening during operations will allow
changed the approach to investment in
for a faster automation and thus, real time
new technologies.
decisions. “Moreover, we need to adopt simulators to run real time, coupled with
Manuel Arroyo, Industry Solutions O&G
machine learning to have a mathematic
Director of Emerson said despite the
approach that supports our decisions.”
massive growth of technology use, there is
Borella stressed the importance of allowing
still urgency for digital maturity. “It is not
ch a m pio n e ngin e e r s a p ply e m e rging
just adopting technology; companies need
technologies, “the human factor would be
to mature the way we use it and have a
the key to success here, as it is what makes
coherent integration of processes.” Arroyo
things happen.”
said despite over a decade of automation integrating into operational processes,
For his part, Eugene Spiropoulos, Global
“there is still people on the field gathering
Systems Business & Consulting Leader of
information manually, thus you can see the
Yokogawa explained that this technology
need to continue implementing automaton
a d o ptio n will co ll e c t su ffi cie nt d at a ,
specially at this stage.” Arroyo highlighted
thus, there is the challenge of filtering
that one of the benefits of automation and
the right data information. He said that
technology adoption was the ability to have
a solid data infrastructure platform, will
more eyes on the process and to use cloud
face the challenge to deliver information
technology that enables remote access to
on different formats for the customer.
company’s assets.
“What we are seeing after COVID-19 is a difference of standards, particularly
Aside from using technology, integrating
engineering standards, so additional costs
technology is key for business continuity to
in infrastructure needs to be considered,”
deliver products and services, said Laurent
said Spiropoulos.
Pagnon, VP Digital, External Technology of Technip FMC . “At the company, we
Duhon asked the panelists about the most
integrated new technology and procedures
significant breakthrough in 2021 af ter
like video assistance, which has changed the
the massive tech integration, to what
landscape of onshore operations, as we are
Ricardo Velazquez, Manager Application
able to connect to the field with operators.”
Engineering at Belden said that vulnerability
Pagnon said COVID-19 catalyzed automation,
assessment is becoming a trend, “cloud
which, in the future, “will allow us to remove
base and edge computing with solutions
field personnel from the red zone and track
access for remote vulnerability assessment
the operations remotely.” He also explained
is what we, as companies, need.”
that automated equipment, products and solutions will allow for this remote operation.
Regarding trends on services, Velazquez said that OT networks and services will be
“...new technology and procedures like video assistance, which has changed the landscape of onshore operations, as we are able to connect to the field with operators.”
driving agreements for oil and gas facilities. Nevertheless, he mentioned that there is a lack of training that hybrid engineers can handle innovation for the OT Networks, and he urged companies to start focusing
Laurent Pagnon
on that, which, as Borella had previously
VP Digital, External Technology of Technip FMC
mentioned, make technology benefits really palpable. A challenge regarding assets is its security, Velazquez said that a network
25
C on f e r ence H ighlights operation centered or a security operation
Duhon asked the panelist about how the
centered (in house or outsourced) will be
future will look like when technology is
the drivers for public and private sector.
integrated, to what Pagnon mentioned that investing on data management to
Fe rnando Arcos , Direc tor of PM O at
connect the business unit at different levels
W-Industries introduced other industry
will support the process of each project.
trends regarding automation and remote
However, looking at a bigger picture,
operation. “Companies are looking for
he said that the industry must align and
cost reduction and increased profits,”
standardize technology integration to
said Arcos. He mentioned that current
achieve successful operations overall. He
companies’ strategies center around keeping
said that when unifying technology use for
their facilities running all the time with no
the entire industry, there are three points
downtime; “once that objective is fixed,
to consider; “data infrastructure, storage
we can build a solution that responds to
and transformation of data to handle it
that need,” said Arcos. He also stressed on
efficiently and data governance to own
the need of training engineers. In terms of
it and use it securely.” Finally, Pagnon
services, Arcos recommended to remotely
recommended companies to align their
find people to look at what operators in
use of technology with their business value
the field are doing. “Take advantage of
proposition, “if the technology we intend
the chance to have experts from different
to use resonated without business value
parts of the world to give an input on your
proposition, then we will really materialize
activities.”
the benefits it offers.”
Arcos added to what Velazquez previously
Borella said that in the future he expects
said about assets’ security, “it is highly
to see companies having an inclusive
e s s e nti a l to i nve s t i n c y b e r s e c u r it y,
innovation process with people, paying
technology should not function without
attention to their training and on building
continuous evaluation of your data security.”
understandable and safe IT Architecture for their productive chain.
Regarding cybersecurity, Spiropoulos explained that adding more devices adds
A rco s m e nti o n e d th e i m p o r t a n ce of
a bigger surface area, thus, “monitoring
regulation and how it needs to respond in
and identifying your threats is a necessity.
order to have the standardized practices
Companies need to have visibility and a
that all panelist where mentioning. He called
strategy to respond, building that strategy
on companies to be the ones asking for the
will make operations more secure.” At this
regulatory requirements they want to see
point, Pagnon added that to permeate a
to have equal, safe practices that favor
cybersecurity strategy, this needs to be
the innovative environment and that allow
fully integrated and embedded in the team
automated and remote practices without
to avoid it filtering from simple emails.
fearing breaking the rules.
26
C on f e r ence H ighlights A COLLABORATIVE PUSH TO REDESIGN OFFSHORE OPERATIONS Offshore suppliers and service providers
overall crisis it has created in the offshore
had to contend with a double-edged sword
oil and gas sector is still ongoing and by no
during 2020; on one hand, the designation
means has been left in the rearview mirror of
of the sector as an essential economic
2020. For Castellanos, the key term was, at
activity meant that core operations were
first, acceleration: any new process redesign
to continue uninterrupted. On the other
that Schlumberger had been discussing for
hand, the delay and cancelation of various
years had to be implemented in a matter
p roje c t s , co u p l e d with th e oil b a rre l
of weeks or months at the most once the
price crisis, led to a ver y competitive
pandemic started. Practices and strategies
e nv i ro n m e n t t h a t n o t a l l c o m p a n i e s
that had been languishing in the pipeline
survived. This, coupled with the fact that
without a clear view of their use were either
Mexico’s offshore sector was in a recovery
implemented or discarded quickly.
curve of its own from the crisis created by 2015’s downturn. It is in this context
Castellanos was clear in saying that the
that the second panel of Day 2 of Mexico
current prospects for the offshore sector
Oil & Gas Summit 2021, titled “Supplier
were in a state of reliable recovery. “Higher
Priorities in the Offshore Services Market”,
crude prices and economic reactivation
incentivized a sharing of lessons learned in
a re a re a s o n fo r c a u ti o u s o pti m i s m .
the path to achieve this survival.
Nevertheless, the sector needs to carefully navigate the current oppor tunities to
The panel was moderated by Luis Vielma
benefit.” One of the impacts of 2020
Lo b o , C EO of C B M X , wh o b e g a n by
that Castellanos needed to adapt to right
explaining the nature of the industry and
away was a reduction in the off shore
its context with the following remark: “The
sector’s available qualified workforce,
pandemic has transformed the global
which coupled with a scarcity of materials
village of the oil and gas industry, and all
meant that available resources needed
offshore supply chains have experienced
to be mathematically rationed, including
major processes of adaptation as a result.”
in contracts with suppliers and service
Vielma Lobo began the discussion by asking
providers. These contractual practices
panelists about the most important lessons
needed to become more flexible and
learned in 2020 and the way in which these
open to proactive solutions and also less
lessons impacted on how they draw up their
distributed so that they could be more
contracts with their clients.
solidly reliable; the times of contracts that included “a little bit of everything” were
Panelist Sonia Castellanos, Geomarket
over, and less moving parts at a time of
Manager for Mexico and Central America at
crisis has meant less risk. According to
Schlumberger, began her remarks by adding
Castellanos, one of the most important
to Vielma Lobo’s context, stating that the
ch a n g e s th at S ch l u m b e rg e r m a d e in
process of navigating the pandemic and the
its off shore activities was to increase the amount of remote operations the
“Higher crude prices and economic reactivation are a reason for cautious optimism. Nevertheless, the sector needs to carefully navigate the current opportunities to benefit.”
company did, from 39 to 61 percent. This was achieved through intense planning and coordination, and a clear and transparent communication policy. Castellanos believes these types of changes will have to become more general in the industry. “All indicators
Sonia Castellanos
point to increased activity in the industry.
Geomarket Manager for Mexico and Central America at Schlumberger
Companies will need to adequately and flexibly use tools and technologies to get optimal returns.”
27
C on f e r ence H ighlights Panelist Cesar Vera, CCO of Naviera Integral,
The way in which the off shore sector
was asked not just about lessons learned
contracted was hard to measure and explain
but about what must be done in Mexico’s
precisely, argued panelist Hermes Aguirre,
offshore sector to create a truly healthy and
Mexico Country VP of Halliburton. Aguirre
consistent service economy. Vera explained
understood his company’s responsibility to
that change in Mexico’s offshore sector
be the continuity of all operational flows.
is hard to direct or even influence from a
This, however, meant restructuring their
top-down perspective, because it changes
finances; as he explained it, “Despite the
in a recursive fashion, meaning constantly;
pandemic, we maintained our same quality
everything that happens in the industry
level. Nevertheless, we had to make several
impacts it directly one way or another, week
adaptations, increase our efforts and costs
after week. Even the recent news of SENER
in the process,” Aguirre made it a priority to
giving PEMEX control over Zama will have
maintain open channels of communication
large ramifications for the sector. For Naviera
with all contractors and clients, so that
Integral, entering into a versatile mode of
emergencies could be attended promptly.
operation has allowed them to thrive not
Continual improvement policies were
just the last 12 months but the last five years,
implemented so that investment capital
since the offshore crisis of 2015 and 2016.
was never lacking. The importance of not cutting down on human resources and
Vera believes that the current path of the
talent development amidst a crisis was also
industry has the chance to support constant
highlighted by Aguirre.
off shore ac tivit y, from strengthening PEMEX to increasing the needs of private
For panelist Javier Cabrales Mendoza,
operators. However, the clients of fleet
Coating InfluXpert O&G at PPG Comex, the
managers will have to take a chance with
rate of adaptation to all the circumstances
longer term contracts if they want to
t h a t p r e s e n te d t h e m s e l ve s i n 2 0 2 0
promote economic health and growth in
depended on the rate of digitalization. “The
the sector. “Fleets do not work in the Uber
big challenge of the energy sector is to
model. Having a vehicle in lease is not
use digitalization to keep the supply chain
the same situation as contracting a ship.
moving and take advantage of opportunities.
Here, long-term contracts with efficient
It is all about speed.” In Cabrales Mendoza’s
cost s and operational provisions are
view, digitalization determined the rate at
essential,” Longer term contracts enable
which organizations could absorb and adapt
the coordination and planning necessary to
to new concepts as the pandemic began, and
navigate contingencies. Vera believes that
this turned out to be the key success factor
the industry must have a clear view of its
during this crisis. He also mentioned the
objectives; decarbonization goals have to
question of communication and coordination
be balanced with production goals in a way
as being facilitated by this same adoption of
that makes sense.
digital technologies.
REGULATORY COMPLIANCE & RISK MANAGEMENT During the pandemic, it became clearer that
of the Mexico Oil and Gas Summit 2021,
the parameters that determine regulations
entitled “Regulatory Compliance & Risk
and standards within the oil and gas
Management.”
industry can change. These modifications have added more risk factors to an industry
The panel was moderated by Benjamin
that had already been hit by a financial
Torres-Barrón, Partner at Baker McKenzie
recession and a slump in oil prices. The best
Mexico, who explained that the hydrocarbon
ways for companies to stay productive and
industry has been subject to very rigid
prevent risks were the main topics discussed
standards in recent years, and these have
during the third panel of the second day
only been increasing. Consequently, mining
28
C on f e r ence H ighlights companies must find the best way to comply
Alvarez, Chief Executive Officer of NRGI
with these regulations and address their main
Broker, said it is critical to the industry as
risks. “It is not only upstream oil operations
contractors often do the riskiest jobs. “The
that should prioritize these issues, but the
oil and gas sector is highly specialized. Their
entire value chain of the industry.”
processes require a lot of risky work that contractors do. If we are not careful, these
“The process of modernizing the regulatory framework was necessary, but the authorization has caused problems and delays. It is important to be able to unburden that process.”
can affect people and the environment.” The regulated usually have the responsibility of everyone who works with them. However, the implementation of a broader regulation is a better guarantee for all. “Even though
Eckhard Hinrichsen
operators have insurance that covers
Country Chair of DNV Mexico
companies they subcontract, adequate risk management calls for even wider coverage to protect income. You never know when an accident can occur because of fragile
The whole industry was affected by the
equipment,” said Alvarez.
COVID-19 pandemic. However, these new changes have allowed safer operations and
Rodolfo Alfonso Esquivel, Director of
provided greater protection to personnel,
Grupo Roales, agreed that having a policy
said José Bosch, CEO of Oleum Energy.
proportional to the work that contractors
In addition, Bosch explained that it has
will provide is the best way to mitigate risks.
not been easy to understand Mexico’s
“As contractors, we have to standardize
regulation, especially in environmental
practices to raise the level of operation in
and basic hydrocarbons matters. However,
this highly specialized sector. Also, we need
authorities have implemented new
to integrate more technology and have
mechanisms and frameworks to adapt to the
more insurance advice.”
current challenges. “Authorities have been receptive and have been understanding
However, panelists also agreed that the new
about delays, giving us additional time to
parameters have created challenges within
comply with new regulations,” Bosch said.
the industry. “The process of modernizing the regulatory framework was necessary, but
I n a n i n te r v i e w w i t h M B N , E c k h a r d
the authorization has caused problems and
Hinrichsen, Country Chair of DNV Mexico,
delays. It is important to be able to unburden
s a i d th e p a n d e m i c h a s c re ate d n ew
that process,” said Hinrichsen. Another
trends within the industry, such as remote
challenge has been that the authorities have
inspections techniques that now have been
asked to show these insurance policies,
fully accepted by clients and provided
which is not the problem but the time lapse
continuit y to projec ts that other wise
they provide, explained Alvarez. Bosch
would have been severely affected. “We
added that the policies that companies need
expect that this will continue even after the
are not on the market, making it difficult to
pandemic is over. Risk analysis many times
be an operator in Mexico.
requires multidisciplinary sessions and we are doing those remotely now, using special
In order to show the importance of risk
cameras. We have come a long way in
management and compliance, the famous
how we go about these projects since the
Eye of Fire was discussed, an accident
beginning of the pandemic.”
that has given the industry a bad image. According to Hinrichsen, the accident caused
Regarding ASEA’s initiative to include not
no injuries and was contained within five
only operators in the regulations, but also
hours. “Its impact appears to be minimal.
contractors and subcontractors, Graciela
However, it is necessary to analyze its
29
C on f e r ence H ighlights environmental effects, as well as the systems
Fr a n c i s c o J av i e r H o c e s , D i re c to r o f
present to see if they can be improved.”
International Consultancy of INERCO, added that the integration of new technology for
Hinrichsen said that an important factor to
best practices based on staff training is
always consider in these operations is that
the new trend. “Technology gives us new
fields and resources change, so a structure
dynamics for risk assessment and remote
that was implemented years ago will not be
supervision.”
effective today. “Updating and maintaining the structures is key to avoiding these types
Hoces concluded the panel by saying that
of accidents,” Hinrichsen said. Meanwhile,
there is a great challenge for the oil and
Alvarez emphasized that PEMEX should be
gas industry in Mexico. He explained that
careful with maintenance, processes and
the country already has regulations and
aging infrastructure so that it can protect
laws that give obligations to companies to
the environment and prevent incidents.
better protect people and the environment. However, these have only remained on
Esquivel said that there are new technologies
paper. The challenge remains to implement
that can improve performance and safety
it in daily activities. Hoces highlighted
in operations, in addition to mitigating the
that the pandemic boosted technological
impact and frequency of these accidents.
development, thus promoting best practices
“New technologies will allow us not to stay
within the industr y. “ These prac tices
with an old solution, which no longer adapts
are coming to Mexico and we have the
to the current opportunities and challenges
opportunity to improve our operations and
of the industry.”
avoid future problems.”
FUTURE ROLE OF NATIONAL GAS PRODUCTION FOR MEXICO’S DEMAND When Texas´ natural gas infrastructure was
production could rid the country of this
damaged by an unprecedented climate event
dependence altogether.
at the beginning of 2021, it did not take long for Mexico to be greatly affected. The magnitude
This question used to be ignored given
and scale of this impact became the last of
the economic advantage Mexico enjoyed
many wake-up calls for Mexican leaders
through natural gas imports, due to the
to address the country’s overwhelming
constant low price of American natural
dependence on natural gas imports.
g a s . N eve r th e l e s s , th i s n ew co ntex t demonstrates that this status quo must be
There are immediate measures that must
challenged more vigorously.
and can be taken, such as the diversification of the sources from which this natural gas
Considering a government that continues
is to be imported, nevertheless, another
to emphasize the importance of energy
matter hangs in the air: national natural gas
independence, sovereignty and self-reliance but at the same time continues to delay the development of a comprehensive national
“Mexico’s electric power generation is driven by gas with a 64 percent, renewable energies by 13 percent, and
natural gas plan, a space is much needed to explore the most important scenarios and opportunities that national natural gas production currently presents.
bunker fuel by 8 percent.”
Warren Levy
To contextualize Mexico’s current scenario
CEO of Jaguar Exploración y Producción
and future opportunities, Warren Levy, CEO of Jaguar Exploración y Producción was part of Mexico Oil and Gas Summit on
30
C on f e r ence H ighlights July 15 and presented clear opportunities
given the current administration’s strategy
for Mexico to succeed if supported by the
where bidding rounds have been cancelled
right company’s strategies. Jaguar is the
until awarded contracts show production
largest oil and gas company that is focused
results,” explained Levy.” Private operators
on material natural gas development and
have grown production while PEMEX’s
exploration in the country. The company
production is in decline.
is also the largest holder of government’s contracts , with 1 0 blocks acquired in
On the other hand, according to Levy,
licensing rounds; 5 blocks in Burgos, 2 in
despite natural gas being a critical source
Veracruz, 2 in the southeast of the country,
of energy for the country and its enabler for
and 1 block in Tampico-Misantla. Jaguar has
energy transition, 40 million Mexicans do
almost 200 employees, which, according
not have access to natural gas for domestic
to Levy, act based on the company’s core
consumption, thus, they use traditional
values “be the energy for positive change.”
energy sources such as lighting fires. “Mexico generates 21 percent of electrical
Jaguar is the only significant independent
power from renewable sources, but less
onshore acreage holder in Mexico, “an
than 2 percent of total energy consumed
attractive country with huge potential
comes from renewables.” Levy exposed
to continue to invest in,” said Levy. He
Mexico’s natural gas consumption by sector;
explained that Mexico’s state’s own oil
which is driven by power generation by a 67
company, PEMEX, dominates the Mexican oil
percent, industrial and petrochemical use
and gas industry, meaning that 92 percent
take up 31 percent, residential use 2 percent
of the Mexican onshore blocks are owned
and transport and services just 1 percent.
by PEMEX and 8 percent of those blocks are
Germany, the UK and Sweden head the list
distributed among private companies. From
of countries using renewable energies at a
that 8 percent, half of those blocks belong
higher percentage.
to Jaguar contracts. “Mexico’s electric power generation is Levy mentioned that Mexico has onshore
driven by gas with a 64 percent, renewable
potential yet to be unlocked as it is one of
energies by 13 percent, and bunker fuel
the largest hydrocarbon resources based
by 8 percent,” said Levy. The rest of the
in the Americas with significant untapped
technology or fuel used is divided between
onshore potential. Mexico is considered the
hydroelectric energy (7 percent), carbon
19th country with the largest recoverable
(4 percent), nuclear energy (3 percent) and
reserves; it has a 1.7 daily oil production
geothermal energy (1 percent).
and a 4.7 daily gas production. Moreover, the country is number one on the Ease of
Levy also exposed Mexico’s dependency on
Doing Business Raking by the World Bank
natural gas production. “The Northern half
Latin America and Caribbean. “The Oil
of Mexico is connected to US’ grid and trades
and gas market is closed for new investors
at US references, plus transportation.” The cold waves that froze Texas’ natural gas at the beginning of the year left between 30 and 40 million Mexicans without electricity and affected the country´s economy as a result, this highlights the dependence on the US. He pointed out that the southern region of the country is isolated from these resources facing steep declines in gas production “remote areas in Mexico have a higher cost and consumption of energy, while still having lower income levels.” The places with the largest natural consumption
31
C on f e r ence H ighlights are Monterrey, Veracruz Guadalajara and
pipeline, and additionally, it is the CNH’s first
Mexico City.
time approved virtual pipeline.
Levy explained that Mexico loses US$6.7
“Mexico needs more companies like Jaguar,
billion per year for the amount of gas
willing to invest on its assets and potential
imported from the US. As gas demand
industries,” said Levy, “Jaguar is currently
continues to rise, Jaguar exploration
building a future for Mexico through natural
prospects (11.6 Tcf) equal to almost 22b
gas.” To get a more sustainable future,
years of current domestic production.
private companies have a key role to play. Natural Gas is the only source of energy
“ En e rg y is th e h i d d e n c h a ll e n g e fo r
available for Mexico that can make a positive
Mexico, thus, it is important to introduce
impact today. As Levy said, this would
sustainability strategies, such as Jaguar’s
keep more money flowing in the Mexican
work in the countr y,” explained Lev y.
economy, reduce emissions immediately,
Jaguar’s Sustainability Strategy compresses
provide cheap and reliable power where it
gas at well head, commercializes via trucks
is needed, build a bridge to future energy
direc t to consumer, leaves a minimal
matrix that is greener, and would ultimately
footprint, has a faster set up, facilitates
be a key source of fuel to drive economic
production from wells that cannot justify a
growth and create jobs.
ADJUSTING EXPECTATIONS TOWARDS A PRODUCTION TIMELINE Before the discovery of Cantarell in the
reservoirs and basins. He also highlighted
1970s, Mexico’s oil and gas resources
that the country’s regulatory framework can
we re u n d e r s to o d m a i n ly th ro u g h it s
enable significant collaboration between
onshore fields, many of which preceded
the public and private sector, while also
the creation of PEMEX . Today,
major
generating collective benefits. Despite these
players in the onshore arena are trying to
facts, Versfeld acknowledged that offshore
bring back that framework by addressing
activity and offshore discoveries dwarf their
the many advantages offered by onshore
onshore counterparts. He also found, in his
development and the potential shortened
research, that the last few years have been
path that it can offer towards productive
characterized by a depression in rig use, in
phases. However, in the fourth panel of Day
part because of the temporary halting of
2 of Mexico Oil and Gas Summit 2021, titled
all onshore development wells. However,
“Onshore Oil & Gas Production Outlook”,
he also found that onshore reserves in the
these advantages were balanced against
states of Veracruz and Tabasco have been
some unique challenges that the sector
increasing lately. “We all know Mexico has
still faces.
great resources but it takes time before results show up in production.”
Niels Versfeld, CEO of Simmons Edeco, m o d e rate d th e p a n e l a n d b e g a n h is
Alexandro Rovirosa, CEO of Roma Energy
statements by underlining the vast geological
Holdings, made clear that onshore
richness that characterizes Mexico’s onshore
operators were among the biggest winners of contracts during the bidding rounds, and
“Gas is the cheapest way to generate electricity and a major driver for economic growth. Every Mexican state should have natural gas available for manufacturing and production.”
that unlike operators in other categories, many onshore operators were born in Mexico and represented national entrepreneurship and talent. He also noted that the success in onshore development in the US could
Dr. Héctor Moreira
be easily mirrored in Mexico, given the two
Commissioner at CNH
countries’ symmetric geologic conditions. “The geology in the US and Mexican side
32
C on f e r ence H ighlights of the border is exactly the same, so both
driver for economic growth. Every Mexican
regions have the same great potential.
state should have natural gas available for
Operators are working hard to try and
manufacturing and production.”
make good on this promise.” At the same time, Rovirosa made many observations
Moreira has been a long-time critic of
regarding how much progress is yet to be
M exico’s ove rreliance on natural gas
made to reach the maturation of onshore
imports from the US, but does place it
activity, particularly for private operators.
in a sound historical context: “When the
One of the examples he gave is that there
Energy Reform was passed, barrels of oil
are no private onshore storage terminals
were worth more than one hundred dollars,
for crude oil, given the large degree to
while Texas was right in the middle of the
which onshore operators rely on PEMEX
shale boom, so natural gas prices were at
for all of these kinds of infrastructure needs.
the lowest they had been, historically. In
However, Rivorsa also made it clear that he
this context, it made sense to focus on oil
was in no way opposed to collaborating
and leave natural gas for later.” However,
more closely with the NOC, and that he
Moreira said that the current status quo in
believed that the onshore sector’s future
terms of natural gas supply is unsustainable,
depended on a much larger degree of
explaining that “Almost all the natural
participation from PEMEX.
gas in Mexico not used by CFE comes from the US. We need more exploration,
Most of the panel’s time was taken up by
production and distribution infrastructure.
a presentation led by Dr. Héctor Moreira,
A time for incredible growth is coming up.”
Commissioner at CNH, on the subject of
Moreira believes that specific public policy
gas production. Moreira has been a long-
mechanisms need to be put in place.
time advocate of developing a national plan for natural gas development given
When asked about the kind of technical
that commodity’s nature and considered
c h a l l e n g e s o n s h o r e o p e r a to r s we r e
a fuel of the future. He addressed some of
currently facing, Moreira quickly replied by
Rovirosa’s and Versfeld’s claims that more
saying that the number one current obstacle
exploration onshore was needed. “Mexico
is COVID-19, and Rovirosa agreed, adding
has invested more money in exploration in
that “onshore, the social aspect plays a
the past five years than it has in the seventy
significant role as a project intersects with
years before that. Its reserves are larger
so many people. The pandemic adds new
than expected. The question now is how
obstacles in this area.” Unlike offshore
to get to production.” Moreira also made it
operators, onshore operators need to do a
clear that his emphasis was on gas because,
lot more community engagement to keep
in his view, “we are moving toward a gas
their fields open; social risk factors can cause
economy, so it is my opinion that gas is
a very quick interruption to your activities.
more important than oil. Gas is the cheapest
These tensions escalated significantly
way to generate electricity and a major
during the pandemic because in many cases
33
C on f e r ence H ighlights communities became distrustful of oil and
point of view, which he believes could be
gas workforces coming in and out of their
easily incentivized with slight changes to
towns and villages.
the regulatory framework. “New private operators entering the country have been
Panelist Iván Galban, Commercial
able to use PEMEX’s infrastructure. But not
Director of Exterran , approached the
all plan to rely on PEMEX in the long term
question of onshore development from
and are looking for other ways to connect
an infrastructure growth and construction
to SISTRANGAS.”
COULD REFINING BE THE WAY FORWARD FOR PEMEX’S PATH TO PROFIT? Fluvio Ruiz Alarcón, Independent Oil and
This situation changed in the 70s, when
Gas Analyst and Former Independent
Mexico began to rely more on exporting
Advisory Board Member at PEMEX focused
crude to maintain its economic models and
his presentation on the NOC. What has been
imported refined petrol instead. The oil
PEMEX’s role over and how did it change
shock of the decades played an important
from its early history down to the current
part in this development. The concept of
reforms, and how could its newly envisioned
extractivism, the act of extracting natural
role as a refining giant become profitable?
resources to sell them on the global market, began gaining strength. “Over time, PEMEX became the main source of tax revenue.
“Over time, PEMEX became the main
Its goals are based on the short-term
source of tax revenue. Its goals are
needs of Mexico,” said Ruiz. Toward the
based on the short-term needs of
90s, this extractivism only intensified when
Mexico.”
the country’s governments saw this tax
Fluvio Ruiz Alarcón Independent Oil and Gas Analyst and Former Independent Advisory Board Member at PEMEX
income as a way to avoid unpopular fiscal reforms. More and more refined products we re im p or te d a n d M exico’s refi ning system began to deteriorate, its importance began to drop. When the 2014 Energy Reform began
After PEMEX was founded in 1938 on the
gaining steam, extractivism reached its
back of the nationalization and expropriation
peak. Getting as many resources out of the
of Mexico’s then-privately operated oil and
ground as possible appeared to be a main
gas sector, the company’s mission was
objective. “The energy reform that came
rather straightforward. “PEMEX’s main role
after focused on rent-seeking, non-strategic
in its existence was simply to survive,” said
refining, in addition the law establishes
Ruiz. First modeled after a more socialist
asymmetric regulation,” said Ruiz. This rent-
system in which workers played a main role,
seeking was defined by Mexico’s new focus
PEMEX eventually became a parastatal
to gain money on rents rather than through
e ntit y. It s role in M exico’s e co n o mic
using its own production to accumulate
model has often been essential, especially
wealth. Ruiz explained that no other country
during the 60s.
in the world structured its industries so that private companies would carry the brunt of
“During its first years, “PEMEX’s stabilizing
investments.
development focused on supplying the domestic market in an abundant and timely
The Hydrocarbons Law established that
manner,” explained Ruiz. For this reason,
PEMEX was subjected to an asymmetric
the NOC only exported marginally. Meeting
regulation, allowing private players to gain
internal demand was its main objective.
more prominence with the playing field,
34
C on f e r ence H ighlights shifting its balance away from PEMEX’s
three of these refineries has been dropped
favor. Trying to establish a free market
from the discussion, which I think is a
in the oil and gas sector was not a great
mistake,” Ruiz argued. Since most of Mexico’s
success, Ruiz argued. The promised wealth
oil is heavy crude, refineries would need to
a n d d eve l o p m e nt th e refo r m to ute d
be reconfigured so that they can refine this
did not came to fruition. “In general, I
straight away to save costs. After all, refining
would say that the Energy Reform was
should add value, but if economics are not
necessary but its implementation ended
balanced correctly the process can end up
up being needlessly aggressive toward the
costing money. Mexico’s fiscal policy toward
productive enterprises of the state, said Ruiz
trying to balance consumer prices would
in an interview with MBN last year.
have to be examined as well “They should go together, but not be as unbalanced as they
With the entry of the López Obrador
have at times,” said Ruiz.
administration, a new vision for Mexico’s oil and gas sector began to take shape. “Today,
But the sweeping changes in the oil and
we see PEMEX being positioned as core and
gas sector have caused disputes between
center of the O&G sector, it seeks to regain
the public and private sector. On the
its self-sufficiency in fuels and bet on projects
other hand, a split between government
like Dos Bocas and Deer Park,” Ruiz said.
g o a l s a n d exi s ti n g re g u l ati o n wo u l d
PEMEX was once again meant to become the
be harmful. To this end, Ruiz says that
cornerstone of the sector in the government’s
reforms in the energy sector should be
mission to establish energy security and
carried by an analysis of how the sector
become self-sufficient in fuel. To this end,
dynamic actually works. “A reform needs
the government seeks to boost Meintxico’s
the biggest possible social and political
refining system. The new prominent Dos
backup possible,” stated Ruiz. The end-
Bocas refinery and the acquisition of the Deer
goal of energy sustainability in the energy
Park in the US are key to this mission.
sector should be carried by three pillars, concluded Ruiz his presentation: energy
Revamping Mexico’s six existing refineries
security, equal access and environmental
will also be of importance. “Reconfiguring
sustainability.
MARKET OVERVIEW FOR THE OIL AND GAS INDUSTRY After a year marked by a decrease in oil
projects. To understand the current state
prices and a pandemic that took the world
of the oil and gas industry, Pietro Ferreira,
by storm, the oil and gas sector experienced
Senior Regional Analyst of the Americas at
ch a n g es th at a ff e c te d seve re ly th e ir
Energy Industries Council (EIC) presented the topic “Present Market Overview for the Oil and Gas Industry” during Mexico Oil and Gas Summit on July 15. The Energy Industries Council is a trade association that represents the energy supply chain which covers all energy sectors. They support close to 70 countries and help to identify business opportunities and expand into new export markets. The council maps three business intelligence data bases: COPEX, OPEX and EIC. Ferreira began his presentation by listing the countries with the highest market
35
C on f e r ence H ighlights opportunities for the energy sector. The
revert production decline and the company
US is number one, with more than a third
has prioritized the development of 20
of projects associated with renewables,
oil and gas fields, most of them located
followed by midstream and downstream at
offshore. “One of these projects is Pokche,
a low measure. Brazil is the second country
where PEMEX is expected to invest over
in the list, with also, the majority of its
US$800 million in exploration campaigns.
projects focused on renewable energies.
Recently, the NOC announced they will
Canada takes third place, similar as Brazil,
be operating the Zama field, instead of
which has the majority of its projects
Talos Energy.
focusing on renewables. Mexico places fourth, with the largest number of projects
For midstream projects, Mexico has a
concentrating around renewable energies.
great opportunity for export gas produced
“Here is important to note that despite
in the US, as there is no need to transfer
the variety of the projects, or despite the
through the Panama Canal. For midstream
majority of projects being on renewable
projects, Mexico counts on Energia Costa
energies, the majority of the investment
Azul, LNG Export Project in phase 1 by ECA
is still going to the oil and gas projects for
LNG, Amigo LNG Export Plant in phase 1 by
up, mid and downstream, which takes more
AMIGO LNG, Amigo LNG Plant phase 2by
than 50 percent of the projects in the US
Amigo LNG, North American Pacific Coast
and Canada,” said Ferreira.
LNG by Mexico Pacific Limited, and Vista Pacifico LNG Terminal by IEnova.
Information regarding projects in Mexico indicate that the majority of them focus in
Fo r d ow n s tre a m p ro j e c t s , M exi co i s
the upstream sector and combined make
ramping-up the construction of the massive
up a CAPEX of US$70 billion with close to
Dos Bocas refinery, which is expected to
50 projects. The downstream sector is the
produce 340,000 barrels a day, coupled
second in terms of CAPEX, compared to
with the revamping of Mexico’s six existing
renewables, which has a rather low CAPEX.
refineries. These seven projects will require a combined CAPEX of US$15.8 billion. Beyond
M exico’s energy projec t pipeline has
Mexico, Ferreira explained that Brazil also
increased recently, with renewables at the
had ver y keen projects in developing
top of the list, nevertheless, oil and gas are
reserves. For downstream projects, Brazil
still accountable for most of the projects.
has 11 key projects going on.
Mexico had a contracting activity in 2020 compared to the previous year, activity in
Aside from Brazil and Mexico, the oil
the upstream, power and renewables were
and gas industry should keep looking at
reduced, and there were more contracts in
Guyana and Suriname. After the Liza Field
midstream and downstream sectors. These
discoveries in 2015 in Guyana, the country´s
projects were led by MPL’s project Low
potential sits next to Mexico, Brazil and the
Pacific and PEMEX’s Dos Bocas refinery.
US. “Aside from its upstream potential, the Guyanese government and ExonMobil
The majority of Mexico’s upstream projects
have par tnered to carr y out a gas to
focus on PEMEX, as it has a long standing to
power project in the country, to bring gas produced on the Liza Field to the shore, as
“One of these projects is Pokche, where
a gas processing plant.
PEMEX is expected to invest over US$800
The US has many types of upstream and
million in exploration campaigns.”
exploration projects, nevertheless, Ferreira
Pietro Ferreira
emphasized on Shell’s Whale Field, which
Senior Regional Analyst of the Americas at Energy Industries Council (EIC)
hopes to be ready by the end 2021, one which started in 2004. “The country has other projects , some large ones with
36
C on f e r ence H ighlights petrochemicals and some small ones with
and to other countries that are starting to
renewable diesel.“
implement regulations. “
In general, there are opportunities for
There are opportunities beyond activities,
countries in Central and South America. For
many of the opportunities are to diversify
instance, in upstream, onshore reserves with
and innovate in order to generate a cleaner
Colombia, where the country also has much
energy matrix or network. Overall, Ferreira
exploration on its Caribbean coast. “Despite
concluded that the region offers a positive
the renewable projects in the region, CAPEX
emerging energy transition panorama,
for midstream and downstream is massive.
with a g re at o p p o r tu n it y fo r s u p p ly
Along the region we see a variety of things,
chain diversification, collaboration and
from very mature fields with strict policies
innovation.
CREATIVITY NEEDED WHEN HANDLING THE INDUSTRY’S FINANCES Oil and gas finances in Mexico have a
given his acknowledgement that so much of
complicated connection with fiscal policies
these discussions usually took place under a
and public budgeting. A large part of the
“doom and gloom” type of context.
sector is dominated by state entities and political actors that are not always easy
PEMEX is measured by the credit rating
to reach and understand in their financial
a g e n ci e s i n te r m s of it s o p e ratio n a l
maneuvers. However, participants of the
flows and debts, not its assets. This is an
last panel of Mexico Oil & Gas Summit 2021,
opportunity for PEMEX because it turns
titled “Financing the Future”, managed to
these assets into an ace in the hole for them.
have an objective conversation about the
“Everything that PEMEX has received after
current state of the industry´s finances.
the Energy Reform through assignments and the Round Zero represented business as
The panel was moderated by Rodolfo Rueda
usual for them. But associations, farmouts
Ballesteros, Partner for Houston & Mexico at
and contract migrations to licenses that they
Thompson & Knight LLP, who quickly threw
control are a different kind of game.”
down the gauntlet by centering the subject around PEMEX, both in terms of its debt
Rodriguez Arregui believes that PEMEX can
and also in terms of its investments. Rueda
have many things to offer if it develops new
Ballesteros made it clear that the number
ways of interacting with the free market.
one concern was getting the NOC to escape
“PEMEX has an advantage in the current
its “rock and a hard place” situation caused
market. It can participate in joint ventures,
by the combination of its elevated tax
where it can be the main beneficiary but not
burden and its elevated debt burden.
the only one.” PEMEX can be much more creative regarding its accounting practices,
Panelist Manuel Rodríguez Arregui, Founder
using associations to move its assets around
and Director General of Ainda Energía &
its own financial convenience. The current
Infraestructura, focused on the positive,
regulatory framework gives the NOC the right to do this. Based on this experience
“Incentive contracts can benefit the industry in the long term, but only if they are accompanied by migrations to new licenses with different tax schemes.”
in the infrastructure market, Rodríguez Arregui suggested that PEMEX should get used to sharing responsibility more and to develop projects with more stakeholder involved. “Nobody in the infrastructure
Lucas Aristizabal
sector undergoes a large-scale project with
Senior Director of Latin America Corporate Ratings at Fitch Ratings
a sole stakeholder. So why should PEMEX? They are an infrastructure company too, at the end of the day.”
37
C on f e r ence H ighlights Rodríguez Arregui cautioned that there
a significant added wealth for the NOC.
are no easy answers. “We are not going
PEMEX is also increasing its reserves and
to improve PEMEX’s situation by reducing
helping its financial situation through
its taxes and giving it more money. What
th ese kin ds of rese r ve in co rp o ratio n
we have to do is take advantage of private
p ra c tice s . A ris tiz a b a l a lso co n si d e r s
investment” Arregui went one step further
SENER’s direct support to PEMEX as a
by saying that Mexico is paying for PEMEX’s
positive development in regards that they
debt, in a way that leads to public medicine
made more visible the issue of PEMEX’
supply not being paid for, and this is a
debt. In the long run, however, Aristizabal
public policy that can only be referred to
believes that contracts need to come with
as completely unsustainable. Rodríguez
enough commercial incentives to attract
A r re g u i a l s o m e n ti o n e d th a t i n th i s
the necessary investment or the numbers
estimation, PEMEX still had a bright future
wo u l d n eve r m a ke s e n s e: “ I n ce ntive
ahead of it because oil demand “is nowhere
contracts can benefit the industry in the
near reaching its maximum point, especially
long term, but only if they are accompanied
when you consider the future of natural gas,
by migrations to new licenses with different
as both a fuel and also a feedstock for vast
tax schemes.”
segments of industrial activity, as well as most, if not all, of the petrochemical sector.”
Panelist Arturo Carranza, Energy Advisor
As Rodríguez Arregui said the energy
at CFE, was similarly blunt about PEMEX’s
transition is not on the way towards making
issues: “PEMEX presents two challenges:
hydrocarbons irrelevant in the short term:
its financial debt and its tax burden. Both
“Despite the increased use of renewable
do not allow it to improve its performance,
energy, oil will continue to be the main fuel.
despite its efforts.” Carranza mentioned
We have to take advantage of it, before it
that the NOC’s tax burden represented
is displaced,”
the loss of 20 percent of its internal sales in the first three months of 2021, considered
Panelist Lucas Aristizabal, Senior Director
a devastating blow. At the same time,
of Latin America Corporate Ratings at Fitch
Carranza sees many opportunities with the
Ratings, agreed with Rodríguez Arregui in
incoming energy transition, stating that
the sense that PEMEX’s production horizon
“PEMEX must take advantage of the energy
was much brighter than most people
transition to increase investor confidence.
think, especially since the production
This will be essential for its transition from
decline has been stabilized successfully
a fossil company to a greener company. The
by the government so far, especially when
world needs to ramp up its climate transition
successfully using new discoveries to make
to avoid dramatic increases in temperature.
up for production declines at flagship
The energy sector contributes two thirds of
mature fields like KMZ. These include new
carbon emissions, so the oil and gas sector
fields like Ixachi, which have represented
needs to step in to support.”
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