Doing Business In Mexico

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Oil and Gas

Success Story

In 2011, British company Petrofac won two of the first three contracts offered by PEMEX to the private sector for performance improvement of the Magallanes and Santuario mature onshore fields located in the state of Tabasco.

Petrofac will invest ¬£303 million for a 90 per cent interest return, it will also receive a reimbursement of 75 per cent of its development costs and extra bonuses for incremental production.

The UK Trade & Investment team at the British Embassy in Mexico has given Petrofac support and advice throughout the project bidding process. UKTI has provided valuable information on decision makers in the market, as well as advice on local business etiquette and local market knowledge.

 

Key Fact

Mexico is the world's seventh largest oil
producing country with an approximate 
production of 2.75 million barrels per
day and the world's fifteenth largest oil 
proven reserves. The country's shale
gas potential resources are considered
to be among the highest in the world
and their development will need the
technology and expertise of world
class energy companies.

In 2011, Mexico was the seventh largest oil producer in the world and currently ranks among the top 20 in terms of gas production. Petr√≥leos Mexicanos (PEMEX), the State National Oil Company is one of the largest oil companies in the world and the sole producer of crude oil, natural gas and refined products in Mexico, being the most important source of government income.

PEMEX requires resources of around US$20 billion per year in capital expenditure in order to maintain production in declining fields, develop a more efficient exploitation of proven reserves, a move towards deep-water reserves and to increase security and minimise environmental impact.

PEMEX has oil reserves of 45 billion barrels and proven reserves equivalent to 9.2 years of production (13.8 billion barrels) Deep water accounts for more than half of PEMEX's prospective hydrocarbons reserves.

In October 2008, an energy reform was passed by the Mexican Government which means that PEMEX has been granted greater autonomy for decision making. This alleviates some of the previous restrictions and therefore makes the state company more open to do business with foreign companies.

While the great majority of the oil and gas industry is in the hands of PEMEX, there are opportunities for UK companies, particularly with the new contract schemes and also for equipment and service suppliers in specific projects. British firms already participate in Mexico's oil and gas industry, both in the new contracts schemes and as service suppliers.

There is more potential to participate in making Mexico's future deepwater production a safe, clean and efficient one. The UK can share its expertise and experience from the North Sea in areas, such as: project management, major contracting, design and manufacturing of advanced equipment.

In 2010, PEMEX announced and tendered its first incentive based contract model for exploration and production. In 2011, PEMEX tendered the first three incentive exploration and production contracts, won by Petrofac. The first licensing round included the mature onshore fields of Carrizo, Magallanes and Santuario; the second round of mature field contracts is expected to be announced in 2012 and will include 6 blocks (4 onshore and 2 in shallow waters). The contract model for the second round of tenders is expected to be very similar to the one designed for the first round.

Major UK companies can bid for PEMEX contracts or might explore the possibility of establishing partnerships with current PEMEX contractors where efficient and affordable technology will be the key.

Most opportunities will appeal to innovative and experienced companies in areas such as: productivity, redesign and maintenance of wells, seismic surveys, environmental restoration studies and infrastructure works. UK companies can sell services to the winning contractors or negotiate a consortium.

Business Opportunities

  • Onshore and offshore.

  • Platform design and construction.

  • Decommissioning of production facilities.

  • Design, construction, installation and commissioning of pipelines.

  • Receiving terminals and production facilities.

  • Exploration and appraisal drilling.

  • Production operations.

  • Environmental control.

  • Regional geological studies (including 3D and 2D seismic).

  • Reservoir appraisal and exploration techniques.

  • Training and education.

  • Deep water technologies.

  • Develop heavy and extra heavy oil recovery technology.

Contact and Further Information

A report on the Mexican oil and gas sector as well as more information about the specific business opportunities can be obtained by contacting the UKTI team in Mexico City: 
British Embassy Mexico City Tel: + 52 55 1670 3234 Email: enrique.cornejo@fco.gov.uk

 

Source - UKTI

 

Strategic Partners