The challenge of the Energy Reform: PROFITABILITY
Marcial Diaz Ibarra is a lawyer, consultant of the Energy Sector, with studies in Public Administration. Collaborated in the Legal Department of Pemex for over 10 years, being Legal Assistant at Pemex Refining, Pemex Gas and Basic Petrochemicals and Pemex Exploration and Production, serving in contentious and advisory matters, as an Advisor in the Committees of Procurement under the New Regimen under Pemex Law and the DACS such as: Acquisitions, Public Work, CAAOS, Subcaaos and the Board of Directors. firstname.lastname@example.org
It’s nothing new that every decade the government of the day seeks to give a direction to the country. We have gone from oil to tourism power, automotive and maquiladora, and while there have been some results, truth be told the undertaken effort needs to start fading with the new direction that it wants to give every decade; we have heard about the benefits of the Energy Reform since 2012 and all the millions of dollars that will be invested in the country, but each statement lengthens the time to see get these investments.
In recent days the Secretary of Energy in Latin America World Economic Forum said:
“The Energy Reform needs more time to be implemented, as they are just up with the procurement of the first investment projects.”
Over the following months, the rounds will be taken to the third major bid for mature fields and deep waters, which foresee investments of more than 3 billion dollars. These are great expectations but the reality is that it may be reflected until early the new government of the Republic, a situation of some concern because Mexico needs to grow immediately.
While it is true that oil generates wealth, this wealth and growth depends largely on external factors which Mexico can´t control and as an example we see that the price of the Mexican mix is not dependent on the production and sales strategies that apply, but of international oil policy that are largely established by major producers such as the United Arab Emirates and the United States. Just remember how was the price of oil in recent years and how it is now.
While it is true that Mexico has large deposits to continue exploiting and others to start, it is necessary to make a thorough review of each project with one aim which is to rethink those where to seek efficiency in every part of the process, because when market prices are depressed, this is the only way to find profitability.
The oil industry should develop other industries, as the diversification process must go hand in hand to implement technology to achieve that efficiency; Mexico’s oil industry still has serious gaps in process automation, obsolete machinery and excesses of contract staff.
Mexico and its Energy Reform are challenged to create a profitable model for investors that analyze the outlook for energy business globally to see us as a country with smart technology projects and a slight contractual regime.
- Of the three states that grew the least in 2014, there were two oil states (Campeche and Tabasco -7.1% -2.5%).
- Productive state enterprise uses 7 workers to perform a process while other oil companies used only one.
- Nuevo Leon and Mexico City are looking to create a Secretariat of Energy, is it necessary?
- In the eighties it was said we had 72 billion barrels as proved reserves.
- Currently it is said that we have 14 billion barrels of proven reserves.
- The reality is what it is produced today: 2.3 million barrels per day.
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Profitability is the ability of something to generate enough profit or gain and the relationship between income and resources that were used to obtain it.