HERMES AGUIRRE & GRACIELA ÁLVAREZ

Mexico 2021 | ENERGY | INTERVIEW

With demand for oil and gas expected to grow and remain steady in the medium term, oil and gas companies are focusing on ways to maximize output, lower costs, and enhance performance across the entire value chain.

Hermes Aguirre Graciela Álvarez

What is your 2021 outlook for the Mexican oil and gas market?

HERMES AGUIRRE Oil and gas is a key sector of the Mexican economy, and we are focused on supporting both local and international companies achieve their strategic objectives throughout 2021. In this regard, we expect our business to grow with the activity taking place. Pemex publicly announced it is working to increase barrels per day production. We collaborate to play a key role in supporting this objective, as well as adding new reserves. The outlook is extremely positive in terms of the activity. We are working together—providers, service companies, operators and government—to solve possible disruption concerns and implement best practices to maintain our operations safely. The price of oil in 2021 has been improving, this should drive for more stability and support more campaigns to be executed.

GRACIELA ALVAREZ According to the director of Pemex in October 2020, the average estimated production for December 31 is of 1.908 million bpd, which is higher that the initial estimate for 2020, which was 1.174 million bpd. That means we expect production to pick up in 2021. We expect more than 1.944 million bpd, which is what Pemex expects to achieve. The National Hydrocarbon Commission has authorized upstream activities of four additional oilfields, so many of our clients are focusing on that area. 2021 could be a year in which everything that was done during the energy reform will be consolidated. Much of that was in exploratory activities, so we expect they will become production activities. There is a reconfiguration of the downstream sector and large investment in this sector. Everyone is looking forward to everything returning to normal.

What role does your company plan to play in the sector?

HA With the cyclical nature of the oil and gas industry, we have experienced different ups and downs. We are taking advantage of what we have learned to be more efficient. One opportunity is that we have increased our speed of technology adoption in all different aspects for increasing customer asset value. We have implemented technologies to increase efficiency and support the operations. When we collaborate, I am confident we will overcome whatever challenges we face and enter the new era of the industry with improved conditions. Another area that we will keep working on is unifying our efforts with customers to give back to local communities—supporting the communities where we live and work is imperative, and we will continue to implement programs to share the benefits of the industry.

GA We have several oil fields. We are working with some large companies that have already been producing for the last two years. How do we support them? I manage the sector for risk management. The fall in the stock exchanges has affected the premiums paid for oil hedges. Many companies that offered oil hedges have withdrawn from the sector, which means one now has to work twice as hard. The insurance sector for the oil industry has been heavily affected. These energy insurances are extremely specialized and are affected by the situation of financial markets. Our country has some risks associated with it because of the credit downgrade of Pemex. However, we have done everything well for many years. We are well-known in the market, which has helped us significantly.

How important is Mexico to Halliburton's international business strategy?

HA Halliburton has more than 100-year history and have been in Mexico for more than 80 years. We plan to be here for many more to come. We have developed Mexican talent and allocated resources to our facilities, which is where we have been growing our footprint. We have strengthened our operations around the country, including the Tampico facilities that we started two years ago and in Dos Bocas. These facilities have increased their capacity to accommodate local and international requirements for the new in-country business. We maintain a strong presence in Mexico.

What are your predictions for the sector?

GA Fortunately, our government is allowing public-private investment, and I am convinced that it is necessary to develop PPPs in the oil and infrastructure sectors. The position of the government is well defined, and it is seeking to establish alliances. I expect to see foreign investors arriving in Mexico. If our government maintains its current policy, PPPs can be the turning point in reactivating the economy. We all want to work at the end of the day. There is great potential in the sector, and in 2021 everyone is prepared to work hard as soon as the vaccine is ready.