TBY talks to two executives at ExxonMobil Mexico, on its relationship with PEMEX, the downstream sector, and the lubricants market.
How would you describe ExxonMobil’s relationship with PEMEX?
JAIME BUITRAGO ExxonMobil is one of PEMEX’s top purchasers of crude and one of its top suppliers of refined products, such as gasoline. The refineries ExxonMobil has in the Gulf of Mexico are ideally suited to handle the types of crude that Mexico produces in the most efficient way, benefiting consumers in Mexico. Also, PEMEX uses ExxonMobil technologies for the refineries in Mexico. Several of our technologies, such as those applied in the production of low sulfur diesel, have environmental benefits for Mexico, and enable PEMEX to fulfill environmental regulations. On the upstream front, we only have non-commercial technical collaboration agreements.
What level of activity is ExxonMobil developing in the downstream sector in Mexico?
PABLO CONRAD We have been in this market for over 125 years, mostly through our brands in the lubricants business and the chemicals portfolio. In the lubricants business, we have a heritage of working with the ESSO and Mobil brands. After the recent merger of our two companies, we consolidated our efforts mostly in the Mobil brand. In Mexico, we have about 250 employees running our operation and we have three facilities. We have offices here in Mexico City, where we run our ventures office and chemicals management. We also have a terminal in the port of Tuxpan, in the state of Veracruz, supplying chemicals to the rest of the country, and a lubricant plant in Mexico City.
What is the key to a good relationship between national and international oil companies?
JB National oil companies, such as PEMEX, and international companies, such as ExxonMobil, face common challenges and often share common goals. We would like to develop a long-term relationship with PEMEX based on these commonalities. This is something crucial in an industry such as ours that is volatile and high risk. Relations between national and international companies have to be structured in a way that both the investor and the resource owner feel like they are in a win-win situation, and where they are able to work together to achieve a positive outcome, leveraging the strengths of each company.
What is your outlook for the lubricants market?
PC This is a highly competitive market. Many of the major companies are present in this market as well. The market has been growing and there are some fundamentals supporting that growth. First of all, there is the commodity-based economy. Commodities like minerals are boosting production and exports. We have a strong position in those segments of the economy. Manufacturing is very strong in this market. Whenever automotive production goes up, demand for lubricants increases. We have accompanied that kind of growth. The market grew at a rate of close to 2% in 2011. ExxonMobil is growing approximately above that rate in Mexico.
How would you describe the differences between the regulatory framework in Mexico compared to other Latin American countries?
JB Basically, Mexico is the only country in Latin America—for that matter anywhere in the world—where the national oil company does not have the flexibility to enter into joint ventures with operators to develop domestic resources. Joint ventures are used by companies everywhere to explore, develop, and produce hydrocarbons in projects that are both capital intensive and high risk. Deepwater projects are an excellent example. Joint ventures allow companies to optimize their portfolio, manage risks, and as a result, new resources are discovered and production levels are maximized. This enables the resource owners to expand their economies and invest more in social problems as a result.
How is ExxonMobil working with the authorities to lower dependence on the US market?
PC Mexico is facing a high increase in energy demand driven by population growth and economic development. ExxonMobil is supporting efforts in the country to provide affordable energy solutions to boost that economic growth and lower dependence on foreign markets. In the downstream part of the business, we can support industries by improving their productivity and providing high-end products from the chemicals and lubricants side. We can enhance the output of industries, improving their productivity in a reliable way, and be mindful of their sustainability goals.
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