OTC: Pemex preparing for cultural transition as Mexico reforms energy laws

Mexico’s Petroleos Mexicanos (Pemex) is preparing for a major cultural transition while the country’s government moves to implement energy reforms ending a 75-year monopoly on discovering and developing oil and gas, a Pemex executive told the Offshore Technology Conference on May 6.

Gustavo Hernandez-Garcia, acting director of exploration and production for Pemex, emphasized that Pemex wants to partner with international companies to help tap unconventional resources and to develop some deepwater resources.

Meanwhile, Pemex already has asked the Mexican government that the company be allowed to continue working on its own on certain deepwater efforts, he said. Pemex has indicated what areas it would like to keep in an initial round known as Round Zero.

The Mexican government is scheduled to make its Round Zero decisions by Sept. 17. Those decisions will outline what Pemex will be allowed to keep and what will be opened to competitive bidding by outside companies.

In response to questions from the audience after an OTC breakfast speech, Hernandez-Garcia described “Round 0.5″ in which companies can propose partnerships with Pemex before the first official bid round, which is scheduled to start January 2015.

Pemex wants to keep its shallow-water production and keep conventional onshore fields, Hernandez-Garcia said, adding Pemex anticipates forming joint ventures with other companies on shale projects, enhanced oil recovery projects, and certain deepwater projects.

“We’d like to go in some areas without partners and in some frontier areas with partners,” Hernandez-Garcia said. “We need the help of capital. We need the help of technology.”

Technical expertise of other companies will be needed for Pemex to tap into its unconventional resources, he said.

Pemex transforming itself

Pemex is preparing to transform itself from a national oil company into a “state-owned, productive company,” Hernandez-Garcia said, adding this is a significant distinction. Although the government still will own the company, Pemex no longer will have exclusive rights to develop oil and gas within Mexico.

“We need to convince our people within Pemex the oil industry in Mexico has changed,” he said of the company’s 150,000 workers total. “We need to be prepared” for a cultural change, he said.

Another change involves compensation for some Pemex employees, he said, meaning certain skilled technical professionals are likely to earn more because Pemex will have to compete for talent. Previously, oil and gas professionals were paid like “public servants,” Hernandez-Garcia said.

“We’d like to have a competitive company, but to be competitive, we need to be pay on a competitive basis,” he said.

In addition, Mexico’s regulators will need to develop more technical expertise.

“They’re going to become regulators not only for Pemex now, but for other players,” Hernandez-Garcia said. As a monopoly, Pemex acted as an administrator of the nation’s oil and gas reserves and resources.

He said additional legislation was submitted Apr. 30 and is under review by lawmakers, who will enact some new laws and will amend some other laws to implement the reforms. The government and Pemex realize the second legislation must ensure financial and contractual stability to attract outside investors, he said.

Contact Paula Dittrick at paulad@ogjonline.com.

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