The view from Villahermosa

With close proximity to the offshore Cantarell and Ku-Maloob-Zaap fields, the inland Gulf of Mexico port of Villahermosa is a major operation center for Mexican state oil company Pemex. Last month the city again played host to the Petroleum Exhibition & Conference of Mexico (PECOM). OE samples some of the sights and sounds from this fast-developing annual event.

Some 150 exhibiting companies representing nine countries took part in PECOM 2010, held 9-11 November. The show kicked off with an opening ceremony attended by, among other dignitaries, Tabasco state governor Andres Granier Melo, who declared the event ‘a great opportunity for companies looking to expand their businesses’.

Representing the state oil company at PECOM this year was Pemex E&P southern region sub-director Vinicio Suro Perez, who said the oil sector reforms pushed by President Felipe Calderon in 2008 would help the southern region achieve its goal of boosting oil production from about 528,000b/d this year to nearly 600,000b/d in 2015.

‘We want to be a high performance region with better management, better governance,’ said Suro, whose region includes the oil producing states of Tabasco, Chiapas and portions of Veracruz.

The reforms, which passed only after being watered down considerably from what Calderon initially proposed, restructured Pemex and gave the company more flexibility in the contracting process. Yet more than two years after enactment, Pemex has yet to award contracts based on the new regulations, and Mexico’s supreme court has failed to clarify key elements of the new rules, Ariel Ramos, a partner with the legal firm White & Case, told PECOM attendees.

Mexico’s constitutional restrictions governing Pemex, enacted after the industry was nationalized in 1938, have traditionally been interpreted in a way that forbids the company from entering production-sharing agreements with foreign oil companies. The restrictions have hampered Mexico’s efforts to explore potentially oil-rich fields in the deepwater Gulf of Mexico.

‘Every time in this country when you speak about oil matters, it becomes a passionate issue,’ Ramos said. ‘So where are we now? We have important reserves that aren’t producing nowadays.’

While the reforms grant Pemex more flexibility, he said, the restrictions governing production-sharing agreements ‘are far away from international standards’.

Pemex’s Suro said the new regulations allow his company to reward contractors for early completion of projects deemed ‘substantial activities,’ including drilling, seismic data gathering and infrastructure development.

‘If you succeed improving your activities, working with quality and delivering what we established at the beginning – but ahead of time – you’re entitled to get something extra,’ he added.

Jesus Silva, president of the board of advisors for the Mexican Association of Oil Services Providers (Amespac), said the reforms, particularly performance incentives, offer oilfield service companies greater opportunities in Mexico.

‘Even though many people will say that the reforms might not have gone deep enough, because of the constitutional restrictions that Pemex has, from my perspective, I think it opens up very important doors to do business with Pemex in Mexico,’ he said.

‘It is also important that the culture of Pemex is changing for the better,’ Silva added. OE

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