OTC: Service companies respond to Mexico’s energy reforms

Mexico’s energy reforms will mean changes for international service companies as well as for oil and natural gas operators and investors, a May 3 panel of service company speakers told the Offshore Technology Conference in Houston.

Panelists said service companies having a history of working in Mexico must adapt, grow, and integrate their services to fit with the nation’s emerging energy reforms.

Service companies already have evolved in response to energy reforms in other countries, said Ian Cook, Weatherford International Inc. vice-president of secure drilling services. He compared reforms in Brazil and Iraq with Mexico.

“The three had very, very different ways of implementing energy reform and different contracts for service companies,” Cook said of Brazil, Iraq, and Mexico. “Offshore drilling has been very low in Mexico. What is the risk for the service companies and who will the service companies be?”

He said Mexico’s contract strategy has yet to be fully outlined. International service companies will have to figure out how to manage risk while doing business under new Mexican energy policy, he said.

“I think the important part is that everyone stays level-headed,” Cook said.

Luis Escalante, general manager of FMC Technologies Mexico, said he foresees many new players coming onto Mexico’s energy market, and service companies will need to be ready to work with multiple customers having different management and different contracts.

“Things have changed in Mexico,” he said. “We are living that already. I see a big difference. Pemex is still the biggest customer, but that is going to change. Pemex also is changing, especially the way they do contracts.”

Energy reform will bring about changes involving procurement, expansion of clients, competition, and local content, panelists said.

Contact Paula Dittrick at paulad@ogjonline.com.