Mr. Harry Bockmeulen, PETROFAC
Release Date: 0000-00-00
A month ago Petrofac was put in the global oil and gas spotlight by winning its first ever incentive contract in Mexico for the Santuario and Magallanes fields. Can you please explain to our readers the basis of these contracts?The basis of the contract is a fee per barrel paid by PEMEX and reimbursement of some capital costs. PEMEX asked companies to bid a fee per barrel to produce over and above a certain minimum production which exists in the fields now. They will give us a fee for all incremental production above that. Petrofac will invest and PEMEX will repay up to 75% of that amount.
While Petrofac has a lot of experience in reactivating mature fields in places like Malaysia or the Emirates, the operations in Mexico is the first time the company is pursuing these types of ventures. Why did you choose to take such a risk?The opportunity here fits exactly within the business model that we work with in places such as Malaysia, the Middle East, and Romania where we have a production enhancement contract. Earlier this year, Petrofac launched its Integrated Energy Services (IES) business, led by Chief Executive Andy Inglis, which brings together Petrofac’s range of services in an integrated way in order to better meet the needs of our customers. The opportunity that PEMEX offered therefore fits within our business model interest. It is also not a one-off opportunity. PEMEX announced multiple similar opportunities in the future and this seemed like a good place for us to start in Latin America.
What are the implications of winning this contract for the overall company?
It is a validation of our business model and it gives us a springboard to look for other opportunities in Mexico and Latin America.
How challenging has it been for Petrofac to crack into Mexican market?
We came here as part of an international bidding process that PEMEX offered. PEMEX managed the entire process extremely well and very professionally for which they should be congratulated. We already knew the key players and what we had to do. In terms of the process they really opened it to anybody prepared to make the investment in time and personnel. It was straightforward to follow.
Compared to other companies who bid Petrofac is a relative “new kid on the block” in Mexico. What are the major challenges that come with this role?
The challenges in some ways are similar to anywhere else. The primary challenge is getting organized and operating the fields to the standards that we set and to the satisfaction of our customers. In that regard they are universal challenges that we face everywhere. Mexico will have its particular challenges which deal more with relationships, learning how to work with our customers, and learning how to live together with the people in the communities near the fields that we operate.
What are your planned investments for both fields?
Contractually we will spend approximately $200 million in the first two years in both blocks which is a function of PEMEX’s contract bidding conditions and the minimum expenditure levels that were part of the bidding process. as the minimum development spend on the fields over the 25-year contracts is approximately $500 million. We will continue to invest as long as the fields are productive and it is very much in our interest to do so. The contracts are very well designed to incentivize the contractor to maximize production and we will look for every opportunity to do so.
With field work expected to begin next year what are some timetables and targets that you hope to reach for maximizing production?
We should see some results within six months of us taking over operations. I cannot assess exactly the size that we can expect, but there are some early opportunities to increase production which we are studying.
Having a solid foot here in Mexico but no other operations elsewhere in Latin America, have you begun the process of eyeing activities in other countries?
Our first priority is establishing ourselves in Mexico. Simply the fact that we will have an organization with existing operations will make it easier for us to look for other operations elsewhere in the region. Clearly it is much easier to go from Mexico to Ecuador than from London to Ecuador. PEMEX is striving to achieve certain organizational efficiencies and transparencies in order to improve the reputation that Mexican oil and gas is more about “know-who” than “know-how.”
Having worked all over the world with many majors and national oil companies, how would you characterize the relationship that you have established with PEMEX? What advice would you give to foreign companies setting up operations in Mexico?
Petrofac took the right decision to pre-invest in opening an office here before it had any permanent operations. Doing so establishes a credibility that you are seriously interested in coming here and it gives you an opportunity to establish relationships with people who you hope to work with in the future. It is important that they see that you are here, that you are committed to be in the country, that you are interested in working here, and are always looking to learn about the opportunities that they may offer. If you are not prepared to be patient, persevere, and be physically present, it will not be easy. I would say that it is essential to be here and invest the time in meeting people.
The recently awarded contracts are certainly exciting opportunities that bring a lot of momentum to Petrofac’s Mexican operations. What is the strategy to maintain this momentum and keep operations as vibrant tomorrow as they are today?
There is plenty to keep us occupied in the long-term. I know that PEMEX is contemplating a second round of contracts either this month, next month, or sometime very soon. We will certainly be looking at them. As also mentioned, this is not a one-off contract. We are focusing very much on delivering the first two fields but we will study what PEMEX has to offer in rounds two, three, and four. And that’s just in Mexico.
On a personal note, even though you have worked in Mexico before this is your first time being permanently based here. What is the most pleasing aspect of working in this country?
Before I took this job and when Petrofac was contemplating sending me back here I called my friends from four years ago to get an update on the situation in Mexico. The friendly, warm, and welcoming nature of the people felt as if they had just talked to me yesterday and I had never been gone. In that regard I was delighted by the opportunity to come back here.
What would be your final message to our readers about Petrofac in Mexico?
Mexico is an exciting place to be. We are very happy to be here and believe that there are a lot of opportunities across the value chain in the whole industry. PEMEX and Mexico are changing, which opens opportunities for everyone. We want to play a significant part, but there is plenty for everyone in that regard.
| Company: | PETROFAC |
| Country: | 墨西哥 |