Our membership director Liam Smyth is leading our trade mission to Mexico this week. Here he updates us on what the missioners have learned so far.
BIG things are happening down Mexico way.
There’s a period of reform taking place in PEMEX, the state-owned energy company formed in 1938, and today marked a new chapter in the bidding auction for exploration and production licences.
Despite the price of oil remaining low, there were nine qualified bids for five blocks.
In the end, whilst only three licences were granted, they represent progress in a fast changing energy market.
Opening up to foreign investors on E&P also opens the market to the supply chain.
And there is big interest in attracting the expertise from the North-east into the largely unexplored deep waters in the Gulf of Mexico.
This week, a delegation of 28 firms from the region is visiting Mexico City and Tabasco to showcase their expertise and innovation to the industry here.
This is the biggest oil and gas trade delegation to visit Mexico City, and the team at UK Trade and Investment and the Mexico British Chamber of Commerce has put together a packed programme of meetings with key people in the top companies in the region.
The welcome couldn’t have been warmer.
So why are firms so keen to come to Mexico now?
Not only is the market opening up to foreign investment, years of state ownership mean that PEMEX is looking for innovation in spades.
The Mexicans plan to explore over 900 wells in the next five years.
Output has fallen from a peak of 3.4mbpd in 1980 to around 2.4mbpd today. Production has been falling and consumption is rising.
Despite massive reserves, Mexico is a net importer of refined products.
The president wants to transform the country, and he’s exploiting the oil and gas reserves to make it happen.
They want to attract interest from suppliers that can maximise recovery from existing operations, can drill in ultra-deep water, can design pipelines in challenging conditions and can get to grips with HPHT. Those skills are all welcome here.
London-based Premier Oil and Dallas-based Talon were successful in the first licensing round, ENI had success today.
But what makes the latest round even more interesting is the new market entrants.
Petrobal, the first private domestic competitor to PEMEX, joined with Houston-based Fieldwood offering the state a 74% production share.
After two rounds, five blocks are in the private hands of a dozen owners.
Blocks secured today will take five to seven years to get to peak production and start to deliver for the state.
These were shallow water fields with combined reserves of 236million barrels of light oil and 190bcf of gas, a small fraction of what is known to be on the Mexican side of the Gulf.
The level of interest in this latest auction gives some hope that UKCS operators will be active in the next round when deep-water blocks will be on offer.
And that is the hope from our delegation here, opening up the market is only the beginning as the domino effect on the supply chain could bag a bigger prize for North-east businesses.
And this trip has a unique aspect too.
At a time when collaboration is encouraged in the industry, Aberdeen & Grampian Chamber of Commerce, Subsea UK, the EIC, and NOF have worked together to get their members to Mexico, sharing costs and passing on the savings to members.
And UKTI and Scotland Development International have done their bit too by supporting SMEs to think about exporting to new markets, some of them for the first time.
This week represents an opportunity to build knowledge and business contacts - new orders may take a little longer.
It demonstrates though that North-east business knows that finding new markets is critical to the future success of their businesses and retaining the oil & gas cluster in the region.
Whilst the UKCS remains important to all of us, some are realising that the rest of the world does too.