Mexico Oil & Gas Summit 2020 - Impact Report

IMPACT REPORT

MEXICO OIL & GAS SUMMIT 2020

Networking Platform

Livestream Sponsor

Gold Sponsor

Silver Sponsors

2020 Mexico Oil & Gas Summit has gone virtual in at a time of unprecedented change for the world and our industry.

The 7th edition of this must-attend industry conference presented the inside perspectives of 44 high-level speakers that will enable the 465 business and political leaders in attendance to make well-informed decisions that will shape the future of the Mexican oil and gas industry.

The introduction of the Brella matchmaking platform introduced unprecedented networking opportunities generated by intent-based, AIdriven matchmaking technology. Based on our experience with Brella during Mexico Oil & Gas Summit 2020, we see tremendous opportunities to create additional value for both sponsors and attendees through the optimization of the use Brella at future conference.

We look forward to welcoming you as sponsor or attendee at Mexico Oil & Gas Summit 2021, which is scheduled to take place on July 20-21, 2021, as a hybrid event in a post-pandemic world!

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C O N F E R E N C E I M PAC T

CONFERENCE IMPACT

32 operators

12 sponsors

PARTICIPATING OPERATORS

44 speakers

465 conference participants

How would you rate the quality of the conference program and speakers?

19% Greatly exceeds expectations 38% Exceeds expectations 35% Meets expectations 8% Below expectations

C O N F E R E N C E I M PAC T

DIRECT SOCIAL MEDIA IMPACT

PRE- CONFERENCE LINKEDIN AND E-MAILING IMPACT

8,772 impressions

36,435 Pre-conference LinkedIn impressions

2.99% click through rate during MOGS

3.37% Pre-conference click through rate

28,797 Pre-conference e-mailing campaign cumulative reach 45,780 impressions

3.13% Pre-conference e-mailing click through rate

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MEXICO BUSINESS NEWS

Visit our website and be part of the conversation Mexico Business News presents inside perspectives for business and political leaders shaping the future of Mexico’s main industries

Don’t miss our editorial and video coverage of the highlights of this conference

Visit: www. mexicobusiness.news/ tag/mogs-2020

BRELLA

Mexico’s leading B2B conference organizer introduces the world’s leading event networking platform.

Delivering intent-based matchmaking powered by Artificial Intelligence that connects the right people. Network, no matter where you are.

2,246 matchmaking communications

257 participants

How would you rate the quality of the matchmaking on Brella?

235 1:1 meetings conducted

12% Greatly exceeds expectations 36% Exceeds expectations 41% Meets expectations 11% Below expectations

MATCHMAKING INTENTIONS

1,362 Networking 1,124 Trading Total

2,841

179 Recruitment 176 Investment

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C ompan y Attendance • 3M

• ChampionX

• Fermaca

• ABS

• Chesterton

• Fieldwood Energy

• Ace Oils Tools

• Cheveron

• Finestra energía

• Actanis

• Chevron

• FLSmidth

• Águila Fabricación

• Ciclo Corp

• Fortinet

• AISCASA

• Citla Energy

• Fraguva Energy

• Alize Energy

• Claxton Engineering

• Frontera Offshore

• Alpha Deepwater Services

• CNOOC México

• Fugro

• AMESPAC

• Comisión Nacional de Hidrocarburos

• FULLGAS

• AMEXHI

• Constructora y Perforadora Latina

• G500

• API Tamualipas

• Construplan

• Gaspeed

• Argus Media

• Consultec

• GIA

• Artelia

• Core Laboratories

• Global Business Inc

• ASEA

• Cotemar

• GMEC

• Axess Group

• Cribas y Productos Metalicos

• Golfo Suplemento Latino

• AXFALTEC

• Cuatrecasas

• Goodrich, Riquelme y Asociados

• Baker Hughes

• Cymaba

• Goverment of Alberta

• Balam Energy

• DBR de México

• Grupo Apollo

• Becquerel Capital

• Deloitte

• Grupo Contro-Tec

• Beicip-Franlab

• DG Impianti Industriali

• Grupo Cresser

• Belden

• DIASA

• Grupo Industrial Águila

• Bettinger Asesores

• Diavaz

• Grupo Mexico Infraestructura

• BHP Billiton

• DNV GL

• Grupo Pereyra

• Blue Marine Shipping

• DOF Subsea USA

• Grupo Protexa

• Boskalis

• Drebbel de Mexico

• Grupo R

• BP

• Drilco Latinoamérica

• Grupo Walworth

• Braskem Idesa

• Eclipse Offshore Solutions

• Grupo Zeta

• Capricorn Energy Mexico

• Embassy of The Netherlands

• Halliburton

• Caraiva y Asociados

• Emerson Process Management

• Hoerbiger

• Carral Sierra

• Energy Agency of Campeche

• Holland House Mexico

• CASIPA

• Energy Bridge

• IAE Business School

• CAXXOR GROUP

• Energy Industries Council

• IEnova

• Cayros Group

• ENI

• IHS Markit

• CEMZA

• Equinor

• IMP

• Centek Group

• Evis Consulting

• INA

• CEPSA

• Evonik

• INERCO Group

• Chamber of Deputies

• Exterran

• INPEX Americas

C ompan y Attendance • Instok

• PetroBal

• SoEnergy International

• International SOS

• Petronas

• Sofec, Inc.

• Intersight

• Petronas Mexico

• Spencer Stuart

• iPS Powerful People

• PM Offshore

• STIN

• iPunto Caxxo Group PR Agency

• PMI

• Sulmara

• Jaguar E&P

• Pontones & Ledesma

• Sumimsa

• Kelly Services

• PPG-Comex

• SUMMUM

• KIEWIT MEXICO

• Premier Oil

• SURPETROL

• KLB Group México

• Protexa

• Tabasco Government

• Kooz

• Quimica Apollo

• Talos Energy

• Laserline

• Relyon Nutec

• TBSek

• Latin American Rainmakers

• REP

• TCO Group

• Lexoil Consultores

• Repsol

• Technip FMC

• Lloyds Register

• Revonos

• Tenaris Tamsa

• Lukoil

• Ridgesecurity

• The Bardazs Group

• MAN ES

• RigNet

• Titan Logix

• Marinsa

• Ritchie Bros

• TMF Group

• McDermott

• Saipem

• TMM

• Mexico Pacific Landholdings

• Samsung Engineering

• Tonalli Energia

• Mexmer

• Sánchez Devanny

• Tory Tech

• MGI (PEMEX subsidiary)

• SBM Offshore

• Total

• MOCS Drilling

• Schlumberger

• UNAM

• Murphy Oil

• Scottish Development International

• Univar Solutions

• Naviera Bourbon

• SEAGA

• Vallourec Oil & Gas Mexico

• Natural Gas Intelligence

• Searcher Seismic

• Verus

• Naviera Integral

• SEMARNAT

• Vista Oil & Gas

• Net Brains

• Senado de la Repùblica

• Vopak México

• Newpek

• Sensia Global

• WAMEX Private Equity

• Noatum Oil & Gas

• Servicios Integrales Nuevo Santander

• Wascon Blue

• NOV DH de MEXICO

• Servicios y Alimentos Bistro

• WEN México

• OCA Global

• Sevicios Petroleros Olimpia

• Wildlands Network

• Oleum Energy

• SGS

• Wood

• ONEXPO

• Shawcor

• Wood Mackenzie

• PEMEX

• Shell

• Worley

• Perforadora Mexico

• Simmons Edeco

• Xion EPC

• Perseus Energy

• Sinopec

• Yamamoto Consulting

• Petro SPM / Schlumberger

• Smart Fiscal Solutions

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P rogram

OCTOBER 28 TH , 2020 08:00

NETWORKING OPPORTUNITY - AI-POWERED 1:1 MEETINGS

08.55

WELCOME ADDRESS

09:00 OIL AND GAS OPPORTUNITIES SHAPING TABASCO’S ENERGY FUTURE Speaker: José Antonio De La Vega, Secretary for Energy Development of the Government of Tabasco

10:00

NETWORKING ACCELERATOR: SCHEDULING 1:1 MEETINGS IN BRELLA

10:30 FIRST OIL AND THE JOURNEY TOWARDS OPTIMIZED FIELD DEVELOPMENT Speaker: Carmine De Lorenzo, Managing Director at Eni Mexico Speaker: Francesco Luigi Peselli, General Director of Mizamtec at Eni Mexico

11:15 CRITICAL SUCCESS FACTORS FOR MEXICO’S SHALLOW WATER PROJECTS Moderator: Gaspar Franco, Professor at the Engineering Faculty of UNAM Speaker: Loren Long, Vice President–Mexico at Talos Energy

Andres Brügmann, Country Manager at Fieldwood Energy

12:00

NETWORKING OPPORTUNITY - AI-POWERED 1:1 MEETINGS

12:30 UPSTREAM INFRASTRUCTURE, MAINTENANCE AND SAFETY Moderator: Alejandra León, Director, Latin America Upstream at IHS Markit Panelists: José Luis Gonzalez, Head Industrial and Commercial Supervision, Inspection and Surveillance Unit at SEMARNAT, ASEA

Eckhard Hinrichsen, Country Manager and Country Chair at DNV GL Mexico

Francisco Javier Hoces-Moral López, Director of Consultancy for the INERCO Group

Gareth Burton, Vice President of Technology of ABS

D AY 1

13:15 HUMAN RESOURCES: AVAILABILITY, PRODUCTIVITY, HEALTH AND COVID-19 Moderator: Guido van der Zwet, General Manager - Commerce at iPS - Powerful People Panelists: Zayra Leon, Talent Acquisition Manager for Latin America at Halliburton

Jenni Lewis, Managing Director at RelyOn Nutec (US, MX, TT)

Socorro Aldape, HR Manager of Golfo Suplemento Latino

14:00

NETWORKING OPPORTUNITY - AI-POWERED 1:1 MEETINGS

15:00 JAGUAR E&P: MILESTONES AND PROGRESS IN ONSHORE UPSTREAM ACTIVITIES Speaker: Warren Levye, CEO at Jaguar E&P

15:45

ACHIEVING COST-EFFICIENCY AND OPERATIONAL EXCELLENCE IN ONSHORE PROJECTS Moderator: Niels Versfeld, CEO of SIMMONS EDECO Panelists: Warren Levy, CEO at Jaguar E&P Panelist: Jose Bosch, Director General of Oleum Energy

Gumersindo Novillo, General Manager of DS Servicios Petroleros at Diavaz DEP

16:30

NETWORKING OPPORTUNITY - AI-POWERED 1:1 MEETINGS

19:00

END OF DAY 1

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P rogram

OCTOBER 29 TH , 2020 08:00

NETWORKING OPPORTUNITY - AI-POWERED 1:1 MEETINGS

08.55

WELCOME ADDRESS

09:00 ENERGY REFORM, CONSTITUTIONAL REFORM AND INDUSTRY’S FUTURE Speaker: Fluvio Ruíz Alarcón, Oil and Gas Industry Analyst

09:45 THE FUTURE OF FUEL DISTRIBUTION Moderator: Roberto Díaz de León, President of Onexpo Panelists: Luz María Gutiérrez, CEO of G500

Enrique Olivera Melo, Director General of Wascon Blue

Sebastian Figueroa, Director General of Fullgas

Bernardo Cardona, Clients and Industries Managing Director, Corporate Responsibility & Sustainability Lead at Deloitte Consulting

10:30 CONTRACTING WITH OPERATORS: DEMAND OUTLOOK Speaker: Marcos Ávalos, Head of the National Content, Supply Chain and Energy Sector Investment Unit and the Ministry of Economy of Mexico

11:15 PROJECT EXECUTION AND SUPPLY CHAIN RESILIENCE Moderator: Antonio Juárez, Director of AMESPAC Panelists: Karla Torres, Contracting and Procurement Lead for Shell Mexico at Shell

Sonia Castellanos, Managing Director Mexico & Central America, Schlumberger

Joel Vladimir Ulloa, Director Global Business Operations of CEMZA

Carlos Ortiz, President and CEO of CAXXOR GROUP

12:00

NETWORKING OPPORTUNITY - AI-POWERED 1:1 MEETINGS

12:30 MINIMIZING FINANCIAL, LEGAL AND OPERATIONAL RISK IN THE NEW NORMAL Moderator: Gonzalo Monroy, Managing Director of GMEC Panelists: David Enríquez, Senior Partner at Goodrich, Riquelme y Asociados

Marco Antonio de la Peña, Partner at Cuatrecasas

Victor Escalante, Chief Financial Officer at Constructora y Perforadora Latina

Ixchel Castro, Americas Market Lead at Wood Mackenzie

D AY 2

13:15 FOCAL POINTS: DIGITAL TRANSFORMATION AND CYBERSECURITY Moderator: Fernando Thompson, Director General of TBSek Panelists: Belinda Quijano, General Director of Apollo Communications

Daniel Zuluaga, General Manager of Summum

Rafael Pureco, Lifecycle & Reliability Sales Manager at Emerson Automation Solutions

David Gonzalez, Managing Partner at Net Brains

Roberto Shigueo Suzuki, Business Development Manager - Secure Access Technologies at Fortinet

Erik Gomez, Senior Director of Strategic Planning at RigNet

14:15

NETWORKING OPPORTUNITY - AI-POWERED 1:1 MEETINGS

15:00 UNLOCKING MEXICO’S DEEPWATER POTENTIAL Moderator: Jesús de la Garza, Director General of API Tamaulipas Panelists: Raul Gonzalez, E&C Offshore Mexico Country Manager at Saipem

Cesar Vera, Chief Commercial Officer of Naviera Integral

Bud McGuire, Chief Operating Officer ADS Consultoría Petrolera (Alpha Deepwater Services)

15:45 OPERATOR PRIORITIES: WHAT SHOULD COME NEXT AND WHY? Speaker: Merlin Cochran, General Director of AMEXHI

16:30 THE ROLE OF OIL AND GAS IN MEXICO’S FUTURE Speaker: Manuel Rodríguez González, President of the Energy Commission in the Chamber of Deputies

17:00

NETWORKING OPPORTUNITY - AI-POWERED 1:1 MEETINGS

19:00

END OF MEXICO OIL & GAS SUMMIT 2020

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H ighlights ENERGY SECTOR VITAL FOR MEXICO’S SOUTHEAST, SAYS MINISTER The investment and business opportunities that the Energy Reform has provided Tabasco will be vital for developing the state and Mexico’s entire southeastern region, said José Antonio de la Vega, Minister for Energy Development for the State of Tabasco.

During the opening presentation of Mexico Oil & Gas Summit 2020, a two-day virtual event taking place on Wednesday and Thursday, the minister delivered a comprehensive insight into the ongoing developments taking place both onshore and off the coasts of Tabasco and explained that the state plays a vital role in Mexico’s oil and gas industry today.

“Following the completion of Phase 1, the Dos Bocas refinery is 24 percent complete and is scheduled for July 2022.”

which became the first privately-held offshore field to reach production since the Energy Reform, is located in Tabasco’s waters. Also is the Zama field, discovered by US IOC Talos Energy, which will be unified between Talos and PEMEX. “This is the first time unification has happened in our country,” the minister said.

De la Vega noted that most success stories of the Energy Reform have taken place in Tabasco.

Among the other major offshore players with interests in the state are Hokchi, Repsol and Shell.

Hokchi, on the Hokchi field, began producing in May 2020, while Shell began drilling its first ultra-deepwater well, Chibu-EXP, in January of this year. It will reach over 6,700m in depth and is one of four ultra-deepwater wells Shell plans to drill this year. The company has committed to drill seven wells between 2020 and 2021 with approved investments of US$426 million.

José Antonio de la Vega

Minister for Energgy Development for the State of Tabasco

“Tabasco is the land of opportunity for the energy sector,” said the minister. “As of today, 111 contracts have been awarded from the Energy Reform. Of these, 39 are located on land or in the waters of the state of Tabasco. That is to say, just over a third of all contracts awarded.”

As Mexico races to improve its production, propelled by President Andrés Manuel López Obrador’s promise to regain Mexico’s position as one of the world’s major oil production nations, Tabasco is making sure it plays its part.

Though private production remains well below that of PEMEX for the time being, contractors with assets in the state are offering a huge contribution.

“In August 2020, production from private contracts reached 57,344b/d, of which 47,948b/d or 83.6 percent came from contracts in Tabasco,” Minister De la Vega explained. Eni’s Area 1 development,

On the public side, the Dos Bocas refinery remains the largest oil and gas project in Mexico.

The refinery is located in Paraiso and is being built to bolster Mexico’s refining production, so crude will no longer have to be sent to the US for refining. Dos Bocas will have the capacity to refine 340MMboe/d and it is a key part of the government’s energy sovereignty plan.

“Following the completion of Phase 1, the Dos Bocas refinery is 24 percent complete and is scheduled for July 2022,” said the minister.

He underlined the importance of the refinery to the state and said that the government’s decision to build in Tabasco would improve the opportunities and well-being of Tabasqueños.

Both the refinery and private projects require an estimated 135,000 high-level experts, technicians and energy professionals, offering more job opportunities to the people of the state, and the southeastern region in general.

“We join the president to promote Mexico’s development and to improve its people’s lives,” the minister said.

H ighlights

F I R S T O I L A N D T H E J O U R N E Y TOWA R D S O P T I M I Z E D F I E L D DEVELOPMENT Eni, the Italian IOC kicked off the first panel of Mexico Oil & Gas Summit 2020, taking place online for the first time due to the COVID-19 pandemic.

Considered one of the world’s most industrious companies with a hydrocarbon production of of 1,871MMboe/d as of 2019, Eni has had significant presence in Mexico after the enactment of the 2014 Energy Reform. The company is on track to remain one of Mexico’s largest private producers. During their presentation, Carmine De Lorenzo, Managing Director of Eni Mexico, and Francesco Luigi Peselli, General Director of Mizamtec at Eni Mexico, outlined the company’s functions in the sector.

De Lorenzo highlighted Eni’s mission in Mexico, defined by responsibility, integrity, transparency and a commitment to a sustainable energy transition. To this end, Eni aligned to the UN’s sustainable development goals. It aims to incorporate greener solutions to its portfolio and forecasts important milestones to be achieved between 2035 and 2050. The company’s goal is to build upon three pillars: operational excellence, long-term carbon neutrality and alliances for development. Eni places a strong emphasis on building relationships with its surrounding communities, developing infrastructure and helping with the fight against COVID-19, among many other actions.

The 67km2 of Area 1 are considered the most important for the company, as it owns a 100 percent of the share. Other areas are shared with partners including Cairn, Citla and Lukoil. Area 1 consists of the Amoca, Mizton and Tecoalli shallow-water complex, known as AMT. AMT’s contract was signed in late 2015.

Eni explored Area 1 successfully by reprocessing 3D seismic data, identifying sweet spots via geologic modelling and drilling a well both rapidly and efficiently. De Lorenzo mentioned that familiarizing the company with Mexico’s regulatory framework was of the essence. Eni’s goal to reach an early production stage in 2019 was met on June 30 of that year. The company’s development plan was only approved by CNH on July 31, 2018. After this point, Eni produced 10Mb/d in its early production stage. “100Mb/d is the goal for the complete production phase, which will begin in 2021,” De Lorenzo said. So far, Eni has invested US$1 billion in Area 1.

Mexico is certainly to benefit from this production as well. “92.3 percent of Area 1’s gross profits correspond to the Mexican state,” Peselli said.

“We are proud to be producing around 21Mb/d after starting at 8Mb/d,” he added regarding the Miztón field, which currently produces the majority of oil in Area 1. Peselli said the company has plans to increase production in a short period of time. “Amoca’s second platform is currently being built in Altamira with 100 percent Mexican content. Its installation is planned for 2Q21.”.

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H ighlights TALOS, FIELDWOOD SHARE ACCELERATED PRODUCTION GOALS Two major operators in Mexico’s shallow waters told Mexico Oil & Gas Summit 2020 that accelerating their developments to reach production earlier than expected would benefit Mexico, PEMEX and the companies themselves.

“It is critical to deliver production as fast as possible. Everyone benefits from production coming onstream – the Mexican state benefits, PEMEX benefits and Talos and its partners benefit,” said Loren Long, Vice President–Mexico at Talos Energy.

“We are very happy about the support we have received from CNH, SENER and SHCP. They did a superb job with moving forward with the unitization during this difficult time.”

Loren Long

Talos Energy

Long and Andres Brügmann, Country Manager of Fieldwood Energy, presented their views, as well as updates on their companies’ respective developments, in a panel moderated by Gaspar Franco, Professor at UNAM’s School of Engineering and former CNH commissioner. The operators discussed how they hoped to increase their contribution to national production as soon as possible, in accordance with their production goals.

“We believe that Area 4 has 2P reserves of 560MMboe of which 455MMb is oil. We hope that this level will be heightened with the future developments we make, including the recuperation strategies that will be put in place.

Next year, we hope to produce between 39Mb/d and 59Mb/d of oil to then ramp up to 74-79Mb/ d in 2022. In the medium term, we expect to hit 110-120MMb/d,” Brügmann explained.

However, there are many challenges to overcome before production can be increased on Area 4 and started on Talos’ Block 7, where the Zama reservoir was discovered. Fieldwood’s plan is to accelerate first production, including an early production stage where the company will connect with PEMEX’s Tumut-A platform, located on an abandoned field 7 miles from the Ichakil Field and 4 miles from Pokoch Field where there will be fixed platforms. The interconnection will allow the company to transport production and to separate oil, water and gas and provide certainty over the volumes being sent to PEMEX. Talos remains involved in unitization talks with its partners and PEMEX regarding Zama, said Long. He explained that the group needed to deliver Zama’s Unitization and Unit Operating Agreement to SENER by early January and that the company is hoping that the FID will be made in the 2H21, once approvals have been granted. The company understands that this

H ighlights unitization – the first in Mexican history – will require patience.

“We are very happy about the support we have received from CNH, SENER and SHCP. They did a superb job with moving forward with the unitization during this difficult time,” said Long.

“With COVID-19, they had every excuse not to move so quickly but this shows the government’s need to reach production soon. The question with PEMEX is understanding how quickly it can move forward with unitization, which is a very new concept for Mexico - it is the first unitization ever and is very high profile. We must keep that in mind, because it comes with a learning curve.

These are new experiences and we are being patient because we think it will ultimately be successful.”

The support of local service contractors will be essential for successful production. In response to a question from Gaspar Franco regarding how

national suppliers could strengthen competition to supply services to IOCs, Brügmann said that experience and understanding requirements set by ASEA were essential, as well as having deep knowledge of local content requirement guidelines, because being a Mexican company did not guarantee strong local content provisions.

Going beyond the minimum requirements set for working regulations was also important.

Both panelists agreed that oil and gas’ future was bright, regardless of the current COVID-19 problems, and that Mexico would ultimately benefit from energy developments. The earlier production could initiate the better, they agreed.

“We are staying focused on the long term. We still need to make the right decisions based on what we think will be a very robust market once we get past the COVID-19 pandemic. It is tempting to focus on today or tomorrow, but our project is one that will produce for 30 to 40 years,” said Long.

SAFETY COMPLIANCE CREATES OPPORTUNITY FOR NEW PARADIGMS

After being hit by the COVID-19 pandemic and the low oil barrel price crisis, infrastructure integrity and safety are now operators’ top priority. “Upstream Infrastructure, Maintenance and Safety” was the second panel of Mexico Oil and Gas Summit 2020, moderated by Alejandra León, Director for Latin America Upstream at IHS Markit. León’s introductory words focused

on how various approaches to safety have changed drastically in 2020 and the ways in which both private and public institutions have responded to these disruptions.

José Luis González, Head of the Industrial and Commercial Supervision, Inspection and Surveillance Unit at both SEMARNAT and

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H ighlights ASEA, highlighted the distinct needs that different kinds of oil and gas facilities present.

“What I think is more complicated is working at offshore platforms, where there is a bigger concentration of people and therefore a higher risk of contagion. This requires different measures than on land,” he noted. Nevertheless, González said it is necessary for companies to “break from the traditional communication dynamics that they are used to,” especially since safety protocols outlined in Mexico’s system for the administration of industrial safety, operational security and environmental protection (SASISOPA) traditionally require additional onsite personnel to enforce them.

A number of conferences have taken place to educate the industry on how to maintain those protocols when authorized personnel is not available due to restrictions derived from the COVID-19 pandemic.

“Oil and gas facilities are hugely complex.

What is really changing are the tools available to manage them. With these, efficiency with maintenance solutions can be increased, and labor demands reduced”.

Gareth Burton ABS Group

Gareth Burton, Vice President of Technology at the American Bureau of Shipping, explained how risk is managed to avoid COVID-19 contagions in vessels and offshore oil and gas facilities. He made it clear that the uncertainty the sector experienced associated with COVD-19 was perfectly normal. This was true especially in

March and April, when “many companies were asking us about what were the best standards and practices when dealing with the pandemic,” said Burton. Regarding technology implementation, Burton noted “Oil and gas facilities are hugely complex. What is really changing are the tools available to manage them. With these, efficiency with maintenance solutions can be increased, and labor demands reduced”.

The panel’s third participant was Francisco Javier Hoces-Moral López, Director of Consultancy at INERCO Group. He mentioned the importance of the industry’s path towards self-regulation. “There are three best practices we can use for self-regulation: communication frameworks, data analysis and modern tools.

This helps us to create a culture, rather than requiring policy to act.” Hoces-Moral López presented the opportunities that this new safety paradigm creates for companies to invest in remote technologies and systems, noting that “solutions like asset monitoring systems, that work online and in real time are quicker when resolving issues, will be a good investment.”

The panel’s fourth participant was Eckhard Hinrichsen, Country Manager and Country Chair of DNV GL Mexico, who said the company provides certification for ships and facilities to reopen safely in the midst of COVID-19 by inspecting both infrastructure and security measures. Hinrichsen stressed the opportunity this new safety paradigm brings, saying that for every crisis there is an opportunity. “A lot of clients were skeptical of remote solutions and now, thanks to the pandemic, they have had the chance to test them. Working remotely is a big opportunity; it helps to optimize processes and slash costs.”

H U M A N R E S O U R C E S : AVA I L A B I L I T Y, P R O D U C T I V I T Y, H E A LT H AND COVID -19 Human resources are the backbone of successful oil and gas operations. This was the main topic of Mexico Oil & Gas Summit 2020’s third panel of the day, moderated by Guido Van der Zwet, General Manager - Commerce at iPS Powerful People.

The first question dealt with how the economic impact of the pandemic has reshaped the labor market in Mexico’s oil and gas industry.

Panelist Zayra León, Talent Acquisition Manager

for Latin America at Halliburton, noted that organizations only have a very restricted room to maneuver due to the downturn. “Massive lay-offs in the industry are challenging our reputation as a reliable employer,” she said.

Attracting new talent was not a new priority because of the state the sector is in but it is nonetheless a priority for the future.

Socorro Aldape, HR Manager of Golfo Suplemento Latino, noted that many jobs

H ighlights were left on standby or scrapped as a result of the pandemic. Nevertheless, the pandemic has also reshaped the way the sector works.

“Changes that we thought would not happen in decades, such as working from home, occurred quiet rapidly,” she said.

Th e se co n d q u estio n d e alt with h ow employment in the oil and gas industry would shift in the periods to come. Aldape expects recovery in the sector will happen next year, as this year will there will be no major changes. “Depending on the evolution of COVID-19, recovery could start by mid to late 2021,” she said. León agreed, but warned that some jobs might not come back at all and that recovery could be slower as a result.

Jenni Lewis, Managing Director at RelyOn Nutec, concurred. “We will see a slow ramp in mid to late 2021 and a more rapid growth curve in 2022.”

The following question dealt with gaps in talent and how to fill them. According to León, having skills and experience are the main requirements. One major opportunity to improve is to address diversity within the workforce. Aldape mentioned that adaptability of the workforce was essential, based on knowledge management, ethics and attachment to the company. These three competences would need to be addressed adequately among employees in the new normality.

Aldape also said processes within companies need to be adapted. People need to learn how to work alone, while simultaneously staying connected through various tools. Lewis noted that this adaptation process might be difficult, especially for older generations that did not grow up in the world of internet. Nonetheless, there are clear benefits in how efficiency can be enhanced. “What we see is a lot of efficiencies that can be created in the back-end of the operation. Using Zoom instead of flying or driving around saves a lot of time. A lot of these efficiencies are here to stay,” she said.

Talent in Mexico might be widely available but the industry has nonetheless voiced its concerns regarding employees. Van der Zwet identified language as a commonly heard issue. “There is still some work to be done in this area,” he said. León, however, argued that an increasing number of professionals in the sector were already bilingual, so the issue was more about refining language skills rather than starting from scratch. All panelists agreed that Mexico had a wide pool of talent available. To further develop this pool, cooperation between IOCs

“We have to make oil and gas sexy again. The sector has seen a lot of turmoil. The frequent layoff and rehire cycles make it less attractive.”

Zayra León Halliburton

and the government was desired, noted Lewis.

Keeping the pool healthy and happy is yet another constant hurdle the sector needs to overcome. “Many of the qualified people have some health problems due to the heavy work they do. Maybe there should be more processes and checkpoints to diminish this,” Aldape said.

To conclude, León expressed that oil and gas companies should engage local talent early on. Nevertheless, to really make the sector appealing, companies would need to plan for the long term and learn how to boost worker satisfaction, said Lewis. “We have to make oil and gas sexy again. The sector has seen a lot of turmoil. The frequent layoff and rehire cycles make it less attractive.” Aldape agreed, adding that rather than only focusing on experienced staff, the sector needs to find and keep young professionals on board to stay healthy.

“We will see a slow ramp in mid to late 2021 and a more rapid growth curve in 2022.”

Jenni Lewis RelyOn Nutec

NATURAL GAS VITAL FOR MEXICAN ECONOMY AND ENVIRONMENT: JAGUAR E&P Warren Levy, CEO of Jaguar E&P – Mexico’s largest private onshore operator – believes the country’s approach to natural gas must change

if it is to reap the economic rewards of its production and successfully transition toward renewable energy.

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H ighlights Levy told Mexico Oil & Gas Review 2020 that at the moment, Mexico imports the vast majority of its natural gas from the US natural gas market, the cheapest source of natural gas in the world.

US gas offers low prices but guarantees Mexico’s dependence on the US and means the country loses out on the revenue that a strong natural gas sector would generate.

“Just 9 percent of the money spent on a unit of natural gas stays in Mexico when importing from the US. If the same gas is produced in Mexico, 100 percent of that value stays in the country, supporting service and local companies. At the moment, roughly US$4 billion a year leaves Mexico due to imports,” Levy said.

Jaguar E&P is the only operator significantly focusing on natural gas in Mexico, according to Levy. The company won a total of 11 blocks in Round 2.2 and 2.3 and controls 3,152km2 in acreage. Its 11 blocks are split between four basins: five in the Burgos basin, one in TampicoMisantla, three in Sureste and two in Veracruz that presently produce 321b/d of liquids and 6.4MMcfd/d of gas. The vast scale of the company’s onshore assets grants it abilities to best optimize its investments, he said.

“Our acreage is comparable to most of the offshore players in Mexico. Having a portfolio that is very diverse and spread across the four basins gives us the opportunity to maximize

“What we need in the meantime is some type of transition. Natural gas is that transition.

We have abundant supplies in Mexico.”

Warren levy

CEO of jaguar E&P

the dollars spent on exploration and look for the best opportunities for ourselves and the country,” he said.

Echoing comments from CNH last year, Levy believes that Mexico is missing a trick in not reconsidering its relationship with natural gas. At the moment, the country is heavily dependent on US imports, a country that has a consolidated natural gas market. While the national demand for natural gas will rise from 4.3Bcf/d in 2020 to 7.4Bcf/d in 2032, Mexican levels of natural gas production will barely rise to 2.0Bcf/d by 2032.

Environmental concerns are another factor why Levy believes natural gas should have a greater role in Mexico’s energy mix. A global shift toward renewable energies is undeniable but with some renewable resources not yet ready to take the weight of energy demands, a transition fuel is needed.

“Many renewables like wind power have issues with continuity of service, while geothermal has limited viability in terms of where power can be generated. What we need in the meantime is some type of transition. Natural gas is that transition. We have abundant supplies in Mexico,” Levy said.

He believes that Jaguar E&P is well placed to deliver natural gas ahead of the growing demand and need for a transition fuel in Mexico.

“Jaguar has a very small percentage of natural gas resources compared to what is still available in Mexico. Nevertheless, our 12.5Bcf reserves represent 50 years of all residential consumption in Mexico. If we are successful in only a small percentage of our exploration portfolio, we will be able to support a very large portion of Mexican families to make sure their consumption is as clean as possible,” he said.

O N S H O R E O P E R ATO R S AG R E E O N I M P O R TA N C E O F S O C I A L ENGAGEMENT The role of onshore fields in Mexico’s oil and gas future will only strengthen as production levels are scheduled to increase over the short term.

The first day of Mexico Oil & Gas Summit 2020 ended with a panel discussion titled “Achieving Cost-Efficiency and Operational Excellence in Onshore Projects.” This panel was moderated by Niels Versfeld, CEO of Simmons Edeco, whose introductory remarks focused on the role of

procurement and contractors in the success of Mexico’s onshore operators.

One of the panelists was Warren Levy, CEO of Jaguar E&P, who preceded the panel with a presentation detailing the current state of assigned onshore blocks. His remarks on the panel were focused on a subject that he also touched upon extensively in his presentation,

H ighlights which was the role of good community engagement in efficient onshore operation.

“Sometimes, simple solutions can generate goodwill among communities. However, it is all about becoming a good neighbor for the next thirty years.” He also touched upon the ways in which community engagement goals were aligned with the adoption of new technologies.

“Online communication requires connectivity for remote communities, which can be an issue. However, we have learned that providing access to the internet and then making publicly available portals is beneficial,” he said.

The panel’s second participant was Gumersindo Novillo, General Manager of DS Servicios Petroleros at Diavaz DEP. Novillo agreed with Levy on the importance of community engagement and he also talked about the role that investment in local communities plays in the development of future suppliers and local supply chains. “One of the most important challenges we had to overcome was the limited availability of services. Even though we have been present for several years, companies were not ready and we had to train subcontractors and work hard

to develop suppliers in the area”. Novillo also highlighted the role that regulators and local authorities play in making sure that community engagement happens in a clear legal playing field. “Authorities must ensure that the rules of the game, which already have been defined, do not change. Legal certainty is needed to attract investment to Mexico,” he said.

The panel’s third participant was José Bosch, Director General of Oleum Energy. Bosch found common ground with Novillo when it came to the importance of more public institutions taking an active role to make sure that engagement follows fair terms, as the opposite can result in a loss of cost-efficiency due to delays. After mentioning some examples of the obstacles he has run into, Bosch summarized his position highlighting the company’s work with communities. “We have special teams that help members of the community to get jobs.

We also work with landowners. In addition, we comply with every environmental requirement,” he said. “We need to have solid institutions. If we have this, there will be certainty for further investment.”

MORE CHANGES TO PEMEX NEEDED, SAYS FORMER BOARD MEMBER he second day of Mexico Oil & Gas Review 2020 opened with oil and gas analyst Fluvio Ruiz Alarcón, who shared his deep knowledge on PEMEX and Mexico’s oil history to locate the company in today’s market, highlighting the problems it has faced and changes that may come in the future.

Ruiz Alarcón, a former independent board member of PEMEX, said that the Energy Reform had been driven by the country’s need to use the historically-strong oil and gas industry as a force for economic development despite its rapidly dwindling production rates. “From my

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H ighlights perspective, Mexico’s falling production pushed the Mexican state to correct the oil industry.

Nevertheless, this did not change its role in economic development. That is to say, with the Energy Reform in 2013-2014, other participants were added to the oil industry to try and correct the falling production rate,” said Ruiz Alarcón.

The Energy Reform arrived with the intention to support PEMEX’s rehabilitation but decisions made from within the company meant that, in some cases, the NOC’s needs were not met, said Ruiz Alarcón. “I witnessed how Round 0 became an example of how the Energy Reform is more aggressive towards PEMEX than what was intended,” he said.

“I witnessed how Round 0 became an example of how the Energy Reform is more aggressive towards PEMEX than what was intended.”

Though the Energy Reform provided important changes like limiting the emission of new PEMEX policies, the NOC remains under threat. Now, with PEMEX still struggling under a heavy debt burden, Ruiz Alarcón believes further changes will be made to the structure and role PEMEX will play within the Mexican economy.

Fluvio Ruíz Alarcón

Oil & Gas Industry Analyst

The root of this problem came around 1981, according to Ruiz Alarcón, when PEMEX’s objectives were changed from those set in 1950 by former PEMEX Director Antonio J. Bermúdez. From 1950 to 1981, PEMEX’s aims involved national considerations, including ownership of national resources, self-sufficiency in energy, contributing to the public purse and improving the lives of oil industry workers.

However, in 1981, following the global oil glut, PEMEX’s role was transformed to a financial and economic tool.

“New institutional adjustments can be expected regarding the role that PEMEX will have in the Mexican oil and gas industry in the future,” he said.

Among those suggested, he noted the separation of PEMEX’s accounting from the national public accounts, along with a further reduction in the company’s tax regime, the prioritization of national oil production for domestic demand and an increase from 0.65 percent of oil income to 1 percent to be allocated to scientific research and technological development.

CLARITY, TRANSPARENCY TO BOOST NATIONAL CONTENT On Day 2 of Mexico Oil & Gas Summit, taking place online for the first time, Marcos Ávalos, Head of the National Content, Supply Chain and Energy Sector Investment Unit at the Ministry of Economy, presented the second panel of the day, addressing the topic of contracting with operators and the outlook for demand. Ávalos’ presentation dealt with the new methodology that defines the amount of national content in upstream oil and gas operations.

He continued discussing strategies for the industrial promotion of local supply chains and direct investment in the hydrocarbon industry (ENFOCAPI). Other themes he touched upon were training and the transfer of technology, “a non-negotiable part of an open market,” Ávalos said.

National content was meant to be a major boon for local talent. By having access to some of the world’s biggest companies, people could

learn and develop. Nevertheless, how and where this local content is applicable is a source of confusion for both national and international operators. During yesterday’s panel, Andres Brügmann, Country Manager of Fieldwood Energy said that having deep knowledge of local content requirement guidelines is essential, because being a Mexican company did not guarantee strong local content provisions.

The methodology to define national content takes various areas into account. “But the methodology is complicated and difficult to understand,” Ávalos said, which leads to a chain of errors from the very first calculation.

Therefore, a new methodology will be proposed, focusing on six easily understandable variables and a transparent, digital platform will ensure its success: “We need to automate everything through a digital platform to have immediate insight on national content. Clarity is of the essence when it comes to these policies.

H ighlights

Transparency for national content is therefore crucial,” said Ávalos.

Regarding the strategies that are intended to boost ENFOCAPI, a new strategy would be published within the coming months, Ávalos added. Defining potential demand is crucial to make the calculations work, which is more difficult as a result of the pandemic. The supply chain is suffering from the general downturn in the sector. Nonetheless, by defining national content and working on promoting local players,

the supply chain then works to enhance its own skills. As a result, knowledge and progress can be achieved.

Regarding training and technology transfer, Ávalos noted that public, private and academic entities would need to combine efforts to truly make this area a success. Even though the pandemic makes it difficult to align objectives, there are plenty of opportunities to improve. In the end, this will trigger an enhanced economic growth, he said.

A SPECTRUM OF POSSIBILITY OPENS UP FOR FUEL RETAIL While upstream companies face complex issues in the hopes of establishing a path toward the future, the downstream side, specifically the fuel retail sector, is enjoying a time of great activity and excitement despite temporary setbacks caused by the COVID-19 pandemic. Day 2 of Mexico Oil & Gas Summit featured a panel titled “The Future of Fuel Distribution,” moderated by Roberto Díaz de León, President of ONEXPO, which is the most important industry association in Mexico for the fuel retail sector. Díaz de León’s introductory remarks were characterized by his optimism and enthusiasm regarding the future of the sector.

The panelist who was most excited about the possibilities that the future may bring was probably Bernardo Cardona, Managing Director of Clients and Industries and Corporate Responsibility & Sustainability Lead at Deloitte Consulting. New technologies that Cardona mentioned would be

included in gas stations in the near future are “Tap-To-Phone” programs and payments, QR codes for digital payment like the ones used by Rappi and Mercado Pago and even unmanned “dark stores” that can be ideal for last-mile delivery services. “If digital payments are linked to marketing and loyalty programs, the benefits could be vast. Globally, there is a lot of potential for doing business in various formats. These have not been applied to the selling of fuels as of yet.”

Cardona also touched upon the future of service

“We have to think about who our customers are and what they care about, like millennials who are more focused on the environment and sustainability.”

Luz María Gutiérrez CEO of G500

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H ighlights stations as not just centers for the retail of gasoline but centers of energy distribution in a broader sense. “Gas stations will increasingly deliver other forms of energy. There will be charging stations for EVs and LPG for NGVs.” Panelist Luz María Gutiérrez, CEO of growing brand G500, was more cautious in her optimism, noting that the sector was a little slow to adopt technological innovations. “Today, we are turning to the digital sphere and its benefits.” Guitérrez was clear in her message that, if the fuel retail sector wanted to reach its full potential , it was going to need clarity in terms of marketing and product. “We have to think about who our customers are and what they care about, like millennials who are more focused on the environment and sustainability,” she said.

The panel was further enriched by the participation of panelist Sebastian Figueroa, Director General of Fullgas, who introduced a comparison between the Mexican and the Guatemalan fuel retail market, noting that Mexican fuel retailers suffer under a much heavier fiscal burden and it would

be in the interest of the Mexican state to diversify its sourcing of tax revenue. “I think that today, we are not moving as fast as other countries when following international gas station trends.” He also mentioned the role that molecular technologies, specifically quality fuel additives that can enhance a car’s longevity, along with trained staff, will play in the future competitiveness of players in this market. “Without training and an experienced staff, you cannot grow further in the sector and compete with companies that have more resources,” he said.

Enrique Olivera Melo, Director General of Wascon Blue, contextualized this optimism in terms of the future role of price and how that illuminates the future of the sector when compared to the US. “Fortunately, not everything is about price. If you want to attract customers, you need quality fuel. The Energy Reform offered an opportunity to improve in this regard. The American business model will be replicated in Mexico. The growth of big companies entering Mexico’s retail segment will eventually stop and they will leave, as it is a difficult business.”

PRICE DOWNTURN A CHALLENGE AND OPPORTUNITY, SAYS SUPPLY CHAIN

Major names from Mexico’s supply chain offered their views on the resilience of the country’s supply chain against the price downturn caused

by COVID-19

Mexico Oil and Gas Summit 2020 covered the sector’s main issues, kicking off with a question regarding how delayed payments from PEMEX to companies have been overcome.

.In a panel moderated by Antonio Juárez, Director of the Mexican Association of Oil Service Companies (AMESPAC), panelists at

Carlos Ortiz, President and CEO of energy investment firm CAXXOR Group, suggested that the current price environment offered some

H ighlights benefits to companies, including low-rate, longterm loans that could be used to meet Mexico’s infrastructure and storage needs. Ortiz believed that that government should back payments owed to service providers by PEMEX. An alternative route of meeting financial responsibilities could be development banks, which many investors are interested in working with. “Development banks could promote a new fund with fully private investments that could have the function of founding production chain programs so that a broader spectrum of suppliers can receive payments on time. The only unacceptable route would be to not resolve this situation,” he said.

Joel Vladimir Ulloa, Director Global Business Operations of CEMZA, said that the industry must take the current situation as an opportunity and work with the government to enhance the fortitude of the oil and gas supply chain.

“Energy demand in Mexico remains high and the government is adding various mechanisms to help operators and companies reach the energy goal. Therefore, we must find the common ground between key industry stakeholders to deliver the ultimate charge: the supply of energy to the country and the world,” said Ulloa.

The COVID-19 pandemic has clearly impacted the abilities of ser vice providers but

companies are adapting, as Sonia Castellanos, Managing Director Mexico & Central America, Schlumberger, explained. “COVID-19 was unforeseeable but here we are. The challenge has forced Schlumberger to expediate the implementation of new operating models, based on enhanced efficiencies and supported by the digital side. Today, 60 percent of worldwide operations Schulmberger is involved in are being done remotely. This ensures there is no compromise on service delivery because full support is there. This also helps to reduce the risk personnel are subject to,” she said.

Depressed oil prices are being reflected in manufacturing and production prices. For Karla Torres, Contracting and Procurement Lead for Shell Mexico, this offers Mexican companies along the supply chain the opportunity to compete with the world’s major manufacturing hubs, like China. “Shell has always looked at Mexico as a potential strategic sourcing opportunity because it has always been critical in the supply chain. We foresee more opportunities for companies now because Mexico is becoming, once again, very competitive when compared to China.

In the latter, it currently costs US$1,000 to manufacture a metric ton of certain items, while companies in Mexico are charging US$800,” she noted.

CYBERSECURITY CRUCIAL IN PREVENTING COSTLY ATTACKS Digital transformation and cybersecurity where the focal points during the 13:15 panel of Mexico Oil & Gas Summit 2020. Fernando Thompson, Director General of TBSek, moderated the discussion and pointed out Mexico is situated among the Top 15 countries in cyberattacks.

Without a doubt cybersecurity is of utmost importance but how can general directors deal with this pressing issue?

Belinda Quijano, General Director of Apollo Communications, said CEOs need to take the lead and take measures. “Seventy percent of oil and gas companies responded by saying they have suffered a cybersecurity attack in an EY survey,” Quijano noted. The average cost of such attacks is a whopping US$5 million. Therefore, a good strategy is necessary to defend against this larger risk, where ransomware and phishing have been the main issues encountered.

“Our clients have facilities that have grown over the years but security has not been considered at all,” said Daniel Zuluaga, General Manager of Summum. Zuluaga added there is an imminent growing risk for companies.

Nonetheless, modern technologies can be of great benefit to overcome potential attacks.

“A fundamental topic is budget. Generally, companies have low budgets when it comes to cybersecurity,” added Rafael Pureco, Lifecycle & Reliability Sales Manager at Emerson Automation Solutions. In some areas, there is

“A fundamental topic is budget. Generally, companies have low budgets when it comes to cybersecurity.”

Rafael Pureco

Lifecycle & Reliability Sales Manager at Emerson Automation Solutions

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H ighlights no budget available at all. For the most part, companies have an abundance of equipment, which sometimes is obsolete. Therefore, good management is needed to deal with the risks.

David G onzalez, M anaging Par tner at NetBrains, argued that above all, assets need to be protected, even though people attack merely to receive money. These ‘crown jewels’ are the heart of the operation. “At the end of the day, many of the strategies can be wellestablished but there needs to be a large enough budget to execute them correctly,” he said.

Erik Gomez, Senior Director of Strategic Planning at RigNet, argued that a full assessment needs to be established for both IT and OT as IoT is added to the mix. “We need to recognize that most attacks in the industry are state-level attacks. They come from China and Russia and they obtain data as well as control over systems in remote areas.”

One problem generally found is that many companies work with SCADA systems, which were not developed taking Industry 4.0 into account. They are therefore rather vulnerable.

Furthermore, today there are more items connected to the system. This includes fridges or TVs, for instance, giving wider opportunity for cybersecurity attacks to take place.

Roberto Shigueo Suzuki, Business Development of Secure Advanced Technologies & Operational

Technologies at Fortinet, pointed out that attacks are common throughout the year for many companies. IoT devices were indeed an increasing risk. “As digital transformation develops, the risk for cybersecurity increases,” he said. Nevertheless, human fragility is always at risk: phishing remains a popular way to gain access to systems. Furthermore, people often take devices home.

Quijano considered specific engineering software to be especially vulnerable, as they have been coded for a specific purpose but have left significant gaps in terms of security. Internal risks might be a risk as well. “Some staff might want to purposely hurt the organization,” she stated. Awareness and training can help identify these risks.

Zuluaga stressed that CEOs need to have a lot of knowledge to be able to protect the company. But teams within the company need to be aware of what happens on the other side as well, especially OT and IT teams, said Pureco. All panelists agreed on the importance of a Chief Information Security Officer, whose role increases in importance constantly as digital transformation takes hold of the sector. González compared digital transformation with warfare in ancient Rome.

Just like the Romans, advantage can be gained by really adapting organization and technology.

“We need a long-term vision,” he said, noting that digital transformation is here to stay and that the road forward is becoming clearer.

H ighlights PEMEX AT CENTER OF RISK MATRIX Without a doubt, 2020 has been a year characterized by simultaneous disruptions and uncertainties in the energy sector. Therefore, it is important to know how Mexican oil and gas companies can better stabilize the ground they walk on. Day 2 of Mexico Oil & Gas Summit hosted a panel discussion titled “Minimizing Financial, Legal and Operational Risk in the New Normal.” The panel was moderated by Gonzalo Monroy, Managing Director of GMEC. In his introductory remarks, Monroy said the subject of risk connected to PEMEX had to be dealt with.

Panelist Ixchel Castro, Americas Market Lead at Wood Mackenzie, focused her remarks on the balance between the turmoil in the international energy market and the opportunities that Mexico has regarding its oil and gas resources. “Project financing is at risk worldwide; this challenge is not exclusive to Mexico. The financial health of the sector is deteriorating and we will see more M&As. Mexico’s potential is unique. Learning one’s strengths instead of trying to overachieve and underdeliver is crucial,” said Castro.

Victor Escalante, CFO at Constructora y Perforadora Latina, is considered one of PEMEX’s foremost drilling partners. Escalante was careful in his choice of words when he stated that “we need to understand that a dramatic 2Q20 created a hole in companies’ cashflows. Based

on this, we need to improve communication with our clients.”

Undoubtedly, the panelist that spoke without reservations in regards to the influence PEMEX has had in Mexico’s overall risk landscape was David Enríquez, Senior Partner at Goodrich, Riquelme y Asociados. “If PEMEX and the government do not realize the severity of the situation and how it affects the supply chain, we will see contractors and subcontractors increasingly resort to litigation. Distress financing and more shareholder equity is part of the new normal, as traditional credit and business as usual do not apply,” said Enríquez.

In the midst of this high-stakes discussion, it was panelist Marco Antonio de la Peña, Partner at Cuatrecasas, who offered the most balanced perspective when he said that “project financing, along with M&As, are interesting alternatives to solve the financial problems of some groups.

However, private investments and capital funds will have to step up and fill other gaps.”

“We need to understand that a dramatic 2Q20 created a hole in companies’ cashflows.”

Victor Escalante

CFO at Constructora y Perforadora Latina

DEEPWATER OFFERS OPPORTUNITIES BUT CONTINUITY, TIME ARE REQUIRED Mexico’s deepwater potential remains large and largely unexplored, according to three major industry players who participated today at Mexico Oil & Gas Summit 2020. The time and investment that deepwater developments represent require political and economic continuity, however. “We cannot underestimate the impact of government policy on investment from IOCs in Mexico’s deepwaters,” said Bud McGuire, COO at Alpha Deepwater Services (ADS Consultoría Petrolera).

“The potential of Mexico’s deepwaters is enormous. It is an unexplored region. The exploration success ratio in deepwater is really high for this reason,” McGuire told the audience.

During the panel titled “Unlocking Mexico’s Deepwater Potential,” McGuire was joined

by Raúl González, E&C Offshore Mexico Country Manager at Saipem, Cesar Vera, Chief Commercial Officer of Naviera Integral and moderator Jesús de la Garza, Director General of API Tamaulipas, to discuss the future road ahead for deepwater projects in Mexico.

IOCs deepwater projects have been criticized by the Mexican government and President Andrés Manuel López Obrador. The president is a staunch opponent of the Energy Reform and says that IOCs are taking too long to deliver on what they promised. However, as the panelists pointed out, deepwater projects are extremely costly and require years of planning, engineering and execution. All

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H ighlights panelists believed that deepwater will be a vital space for Mexico’s energy future.

Deepwaters have traditionally been off limits for PEMEX, which is a world leader in shallow water and onshore production. Though it embarked on a few deepwater developments following the Energy Reform, those it went at alone were abandoned, while Trion, undertaken jointly with Australian IOC BHP, remains ongoing. Yet, a recent change in tact from government officials including those from SENER, point to a change in direction, González said.

“Even before the pandemic, PEMEX stated that it did not want to go into deepwater.

Lately, it has changed their tune, recognizing deepwater might be inevitable. The south of Mexico is largely lacking in gas, which deepwater developments could bring,” he said.

While the Zama reservoir is the standout deepwater discovery since the Energy Reform and will require the country’s deepest-ever fixed platform to be brought to production, PEMEX will likely head to the Cuenca Salina area because it is shallower, requires less investment, is quicker to bring to production and is located in the south of the country where gas storage is most acute. But even in the Cuenca Salina, PEMEX will be moving into depths it has very little experience in and will require new ways of employing technologies. “The technical definition for

deepwater is 500m and PEMEX has never completed a development deeper than 180m,” Gonzalez said.

New ways of working will be essential for PEMEX if it is to carry out costly deepwater developments in a financially-efficient manner, Vera said. “Technology will be a critical factor in determining deepwater’s ability to compete with onshore shale. Exploration analytics to increase recoveries is one of those technologies, as well as digital applications to improve operating efficiencies and predictive maintenance analytics for critical pieces of equipment.”

Associated costs are also important to think about, according to Vera. He highlighted his own company’s involvement with Shell and noted the ways that Naviera Integral is streamlining transport costs to platforms that are very far from shore. “We need to start breaking paradigms and that is what we are doing. For the first time, we are using vessels to transport personnel for crew change rather than helicopters. Instead of transporting six people at a time, we are transporting 35. It is a longer run but we ensure greater fuel efficiency and reduced emissions.”

Though deepwater projects take time and patience, panelists had no doubt that it will continue to progress. “Stay tuned for deepwater,” said Gonzalez, “it will happen really, really soon.”

RESULTS IN THE MIDST OF UNCERTAINTY: AMEXHI Since 2018, the cancellation of bidding rounds have haunted Mexico’s oil and gas landscape.

Never before have industry leaders felt the need to reverse a decision so urgently. Oil and gas operators in Mexico have had no choice but to move forward with their investments and projects as they wait for a clear path forward concerning their role in the sector’s development. Lack of certainty has permeated the industry and with this in mind, Mexico Oil & Gas Summit presents

“The technical definition for deepwater is 500m and PEMEX has never completed a development deeper than 180m.”

Raúl González

E&C Offshore Mexico Country Manager at Saipem

“Operator Priorities: What Should Come Next and Why?” a presentation by Merlin Cochran, Director General of AMEXHI, considered the most important industry association for private oil and gas operators in Mexico.

Cochran began his presentation with a brief history of AMEXHI, an industry association established as a consequence of both the Energy Reform and CNH bidding rounds. Cochran said all major bidding round winners were members of AMEXHI and pointed out that 23 companies are contributing to national oil and gas production.

Cochran highlighted the success private operators have had in deepwater exploration. “At the moment, Mexico has 19 wells under exploration or

H ighlights already explored in the general offshore category, which is more than on the other side of the Gulf of Mexico.” He showed a map which demonstrated deepwater seismic information available between the Mexican and American sides of the Gulf of Mexico is equivalent and mentioned that US$40.7 billion in investment had been approved by CNH. Of this, 62 percent will be invested in exploration, 31 percent in development and 7 percent in evaluation.

Cochran broke down investment volumes and reserves into contracts and areas and also touched

upon hot topics such as shale developments.

“As soon as technology moves forward, we will have better possibilities to access unconventional resources.” Cochran made reference to AMEXHI’s 2020-2024 plan and told the audience that private operators remained stable and ready for the future, despite the murky waters the industry has been currently navigating in. He highlighted that certainty, sustainability and innovation will be the main points that the oil and gas industry will rely on for a promising future. “We respect the government’s policies and hope it responds to our positive results.”

ENERGY DEVELOPMENT: BACKBONE OF GOVERNMENT POLICY “We need to recognize the hard lessons and challenges COVID-19 has presented us,” Manuel Rodríguez González, President of the Energy Commission in the Chamber of Deputies, said during the last intervention of Mexico Oil and Gas Summit 2020. While there has been a drop in oil prices and demand, Rodríguez referenced several experts on the matter including IEA that believe crude oil demand will peak in 2030.

After that, the drop will be somewhat steep, resulting in 45MMb/d by 2050. Natural gas, however, will increase in importance toward the future, as the fuel for the energy transition.

Meanwhile, renewable energies will be the longterm winners due to their low emissions.

Rodríguez stressed that several factors could influence the role of oil and gas in the global energy mix even further and that major countries would shape the path ahead. Countries like China, for instance, could potentially reach net zero emissions in 2060 by using clean energy.

Rodríguez said the upcoming US elections were also of importance because for Trump, producing shale gas would be a staple. “Biden, on the other hand, has decided to opt for clean energy in order to stem emissions,” he noted.

But oil is not sidelined yet. “Today, global systems still rely on oil. This will be the case for the foreseeable future. After all, if we stopped producing oil and gas today, we would face severe repercussions tomorrow. Therefore, it still makes sense to focus on producing crude oil in Mexico through PEMEX.” One major issue PEMEX faces is its decline in production, which has become apparent for many years now. Extensive action has been

taken by the López Obrador administration to reverse the production drop but the pandemic did not help and results could clearly be seen in 3Q20. The widely discussed OPEC negotiations proved a further hurdle for the NOC. Nonetheless, Rodríguez mentioned that PEMEX aims to produce 1.9MMb/d by the end of 2020 with its 18 newly producing fields.

Seven more fields are expected to yield results soon after.

In 2021, PEMEX will receive a substantial budget as a result of increased production, with which it aims to contribute 5.18 percent of Mexico’s GDP. The NOC wants to produce over 1.94MMb/d in 2021. By 2024, production should climb up to 2.36MMb/d. Nonetheless, the impact of the pandemic remains uncertain. “We cannot leave out the contributions of private oil producing companies in Mexico, who are expected to produce around 280Mb/d by 2024”, Rodríguez added.

The President of the Energy Commission noted that measures had been taken to provide more breathing room for PEMEX and that renewable energy was still an important element for the Mexican government. “The core of the Energy Reform is still intact,” he said. International collaboration is needed to come up with a new, resilient and sustainable energy model at a global scale, which Mexico supports.

“We need to recognize the hard lessons and challenges COVID-19 has presented us.”

Manuel Rodríguez González President of the Energy Commission in the Chamber of Deputies

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