Ivan Sandrea, the CEO and director general of Mexico-based Sierra Oil and Gas, believes two major factors will determine the success of the sector in Mexico and broader Lain America.
‘The first will be how active Pemex is in the initial rounds, vis a vis new players and available acreage, and the implementation (and flexibility) of guidelines by the regulators in areas such as pre qualifications, speed of permitting, among others,’ Sandrea told the Oil & Gas Council.
Mexico is undergoing massive reform in the energy sector, and for the first time since 1938 is inviting the world’s largest oil companies to invest in the country. An initial auction of 14 oil exploration areas in the Gulf of Mexico has already begun in earnest.
‘From past experiences in countries as diverse as Brazil, Colombia, Norway, and Peru we know that some of the key success factors that enables a vibrant industry and future growth is creating open regular access to a range of diverse companies, data availability and a way to get data acquired in frontier areas, maintaining a transparent level playing field, promoting investment with fair terms and flexibility, and allowing safe operations execution in a timely way. All considered I am very positive based on what I see today.’
He said in terms of Latin America, the region was once again on the radar of the international and regional oil and gas industry, service companies and policy makers.
Secular changes in major oil and gas hubs such as Russia, North Africa, West Africa, and the Middle East, limited access to acreage in the traditional producing areas, as well as the lack of new exploration successes outside the emerging provinces such as East Africa and the Eastern Mediterranean, among others, have made Latin America an interesting place to re-visit.
‘Yet despite substantial reserves and yet to be found hydrocarbons, the region is increasingly becoming dependent on imports of gas and refined products. In fact, the energy trade balance of major oil producers and exporters, countries such as Venezuela, no longer looks that favourable.’
Unfortunately, he said, structural issues were likely to prevent any reversal of these trends across several countries in the years to come, unless radical reforms were enacted, as in the case of Mexico.
However, he added: ‘It is now possible that Mexico will be a major positive force and an example for others to follow.’