2016 Oil and Gas Summit: Critical success factors for a healthy supply chain

Moderator: Ernesto Marcos Giacoman, President of Amespac
Panelist: Salvador Ayala, Vice President of Marketing, Sales & Technology of Schlumberger
Panelist: William Waggoner, President and CEO of Mexico Petroleum Company
Panelist: Mike Martinez, VP Business Development OPF of Wood Group
Panelist: Marco Osorio Bonilla, Director General of the Mexican Petroleum Institute (IMP)

Ernesto Marcos Giacoman, President of Amespac, opened the panel asking the participants to define the critical elements that the Mexican market needs to develop to have a healthy supply chain in the country, given the national content restrictions stated by the law.

The CEO of Mexico Petroleum Company, William Waggoner, stated that even though private enterprises are now allowed to participate in the industry they need Pemex’s help. Not only that, but the industry also needs local suppliers and service companies to reach out to private operators that want to dabble in the Mexican market. Even though foreign companies might be tempted to use their own connections, they must be willing to work with Mexican corporations first. Foreign enterprises definitely should blend with Mexican companies. The key is to identify the resources, and talent in Mexico that are useful for them, and the ones that need to be brought from the US.

Mike Martínez, VP Business Development OPF of Wood Group, acknowledged they had been working with local operators. In their opinion, the opportunities they have had with local operators have evolved to be much more than just a work relationship. In the case of the Wood Group, it decided to team up with a local company, and create a joint venture to have the best of both worlds.

For a company such as Schlumberger, its VP of Marketing, Sales and Technology, Salvador Ayala, mentioned that service supply in Mexico is quite well established in terms of accessibility, and logistics. Due to the geographical proximity of Mexico to the US, it is relatively easy for suppliers on the other side of the border to establish their operations in Mexico since they are in their comfort zone. However, suppliers need to be more efficient and more broad. The energetic reform provides important business opportunities for them.
Marco Osorio Bonilla, Director of Product Technology in the Mexican Petroleum Institute (IMP), declared that communication, and openness between operators and technological enterprises is needed. Working as a team is important for the industry. For Osorio, the IMP must have a project portfolio balanced with market research. They also need to push for certified suppliers, as a way to procure investment security.

Martínez mentioned that in Wood Group they had had to reduce their engineering costs up to 50%. The cost reduction mandate led them to the creation of an innovative team in charge of reinventing procedures to make them more cost-effective. Even though the industry has progressed, the energy reform in Mexico needs to be  a technological reform, and the Mexican industry needs to shift towards production. Local companies are an important piece of the puzzle as well, and need to come up with new industry standards that are safe, high quality, and cost effective.

The panel then turned its attention to the actions that the IMP can perform to maintain the technological capacity that is usually lost when crisis such as the current one present. Osorio Bonilla, mentioned that the IMP has had to planned different strategies that are needed to avoid losing technological capacities. These strategies are based on taking advantage of fiscal incentives, and developing investigations that are aimed at solving short-term problems. The IMP its changing its working scheme and is ready to work with national and international companies, and not just Pemex. 

Waggoner encouraged Pemex to participate in joint ventures with private companies for deep water exploration, as Mexico has not seen much. If the oil and gas expansion is going to take place, players need to look for opportunities in other types of ventures. Pemex is doing an outstanding job providing transparency.

When asking what else could be done by the Mexican authorities to improve the industry, Waggoner said that human capital needs to be prepared to face the new industry challenges. Martinez emphasized the need of using modern technologies. Salvador Ayala congratulated the government on its reasonable and doable national content policies. He questioned the efforts that are being made to attract talent in geology or oil related careers, as the energy reform needs experts to make the energetic reform sustainable.