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Opportunities in Mexico

 

OGV in association with Whittaker Engineering, hosted a business focus lunch discussing the opportunities in Mexico for Oil and Gas related companies. Presentations from Angela ?… from ProMexico and Murray Whittaker from Whittaker Engineering, provided key benefits and expert knowledge on this growing market.

For many major oil companies, Mexico is becoming a land of opportunity. Mexico is one of the largest oil producers in the world, (Producing 2.1 million barrels per day since 2017) and the third largest in the Americas after the USA and Canada.

More recently, Mexico’s upstream sector has opened to attract foreign capital and investment through its abundance of hydrocarbon resources. Earning the title of ‘The country with the highest oil producing potential in the Americas’, now is the time for more oil and gas companies to make the move to Mexico.

Historically, the industry has depended on Pemex, one of the leading Oil and Gas operators in the world and the largest company in Mexico. However, following a downturn in 2013, Pemex’s financial position has deteriorated, partly due to weaker oil prices. Consequently, Mexican oil production has fallen sharply resulting in the state’s drive to promote foreign investment.

At present, there are over 60 operators working within the market, including Oil giants BP, Shell, Equinor, ENI, Premier and Total. With a wide range of clients requiring specialist products and services, the potential for the supply chain is huge.

There is confidence financially, with greater spending decisions being made to help the country prosper. As a result of the Energy Reform, the government of Mexico expects circa $50bn in investment by the end of 2018.

In terms of business operations, Mexico provides a strategic location and time zone, easily accessible globally. It has a similar time zone and geographic proximity to North America, the world’s largest oil producer but provides opportunities at a considerably lower cost than its neighbouring country.

Mexico also boasts an impressive export platform. As the main Latin American exporter, some of its top export products include motor vehicles, petroleum oils and bituminous materials, computers, medical equipment and gold.

Despite the appeal of untapped oilfields, companies need to act carefully if they wish to successfully navigate the Mexican market. To be profitable, it is essential to build a set of close, local relationships and develop new assets effectively, whilst minimising operating costs. Setting up business in unfamiliar territory requires a great deal of research and local knowledge.

Whittaker Engineering is an example of an Aberdeen based engineering firm, that has been successfully operating in Mexico for almost a decade. Their Mexican subsidiary, Whittaker Mexicana is based in Ciudad Del Carmen, Campeche, Mexico.

Formed in April 2009, they offer high quality engineering and fabrication services to the Mexican Energy sector; In addition to engineering-logistics-offshore manpower and storage.

Whittaker Mexicana has utilised the country’s large pool of highly skilled labour to offer European standards to the Mexicana energy sector. With a workforce of 60 people, they hope to increase this to a team of 100 for larger projects in the future.

Murray Whittaker, Managing Director of Whittaker Engineering said “The supply chain in Mexico is there but it is not as advanced as it should be. We can’t thrive without valves, gaskets, heli-deck loading systems and all of the equipment that many Aberdeen companies supply. At the moment, Mexico’s supply chain is only set up to support their National Oil company, meaning there is a need from international companies, who require this to operate. There is potential for partnerships.“

Ciudad Del Carmen is the hub for Oil and Gas and the recommended choice for setting up base in Mexico. Seen as a commercial region, it provides a more developed landscape and less potential risks. The area is already home to a number of companies along with Villahermosa, another renowned location.

Recognising an increased interest in the Mexican market, more initiatives are being set up to support UK companies to transition. The Scottish Development International (SDI) in partnership with the Department for International Trade (DIT), continues to organise trade missions to Mexico, providing an expert introduction to the country. These visits allow further exploration in to the opportunities of the region and include onsite visits to companies such as Whittaker Mexicana.

Mexico is keen to raise its status and by opening up to foreign investment, it hopes to regain its position as one of the top crude producers in the world.

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