Pemex – Mexico Model: A Multi-beneficial Solution to Problems Facing the Egyptian Petroleum Sector

Pemex – Mexico Model: A Multi-beneficial Solution to Problems Facing the Egyptian Petroleum Sector

In 2008, PICO started to explore new business opportunities in countries other than Egypt, thinking out of the box; PICO then approached Pemex in Mexico for the following reasons:

  • Mexico is rated within the largest ten (10) countries in Petroleum Production.
  • Different mind-set than neighboring & regional countries that almost follow similar routine work of Egyptian authorities.
  • Exposure to other international cultures, means more international experience.
  • Success means expansion in North and Latin America.

PICO Team approached PEMEX Company in Mexico and demonstrated their services and integrated services projects management capabilities, as part of our total project management and operational experiences. Accordingly, the operations and contracts management in PEMEX recommended our participation in one of their upcoming tenders listed below to widen the circle of competition and knowledge.

  1. In Reynosa City (on the border of McAllen, Texas):
    a) A tender to drill 300 development wells in three years with depths from 3,000m to 3,500m. The main lithology was sandstone and shale.
    b) A tender to drill 30 exploratory wells and 140 development wells in two years, extendable to drill up-to 700 development wells in 5 years based on productivity and drilling performance.
  2. In Tampico City (550 km south of Reynosa):
    DIAVAZ Company has a contract to drill 300 development wells in two years with depths from 1,500m to 2,000m. The main lithology was shale, sandstone and limestone.
  1. In Poza Rica City (300 km south of the Tampico City):
    A tender to drill 500 development wells in 5 years in the «Chicontepec» project with depths from 2,000m to 3,000m, the main lithology are sandstone and shale.

The average of the above projects is approximately 435 wells per year, over and above their regular drilling performed by their concession agreements, with international partners mainly in the deep waters and offshore work.

The Model:

  1. Service companies buy the tender online to participate in the tender with no registration routine work needed from new comers.
  2. The tender includes all the needed forms and well shape samples.
  3. Alliance or ownership certificate with a rig company to be nominated as a serious bidder.
  4. Original stamped quotations of any outsourced services to be attached in the tender proposal.
  5. Salaries, bonuses, per diems, national and international transportation costs, as well as costs of accommodations, are to be attached in the tender proposal, in case it exists.
  6. Logistics including site preparation and accommodations costs.
  7. Insurance, HSE fees, as well as taxes.
  8. Banks interests, fees and/or charges.
  9. Profit Margin (transparent real value not subject to any negotiation).
  10. Community Development (2.5%) of the total contract value.

N.B.: Pemex disqualifies offers if proven to be careless offers (for example: writing PEMEX or tender name in Spanish misspelled), exaggerated costing offers, as well as underestimated costing offers.

Benefits of the Model to the Country:

This model does not need time to be executed, as it will not imply any changes in rules, regulations, or country laws. It will duplicate the activity of drilling and early production.

  1. We can export oil & gas and other petroleum products rather than importing them; an issue that shall save hard currency and fulfill internal country needs.
  2. Pay back money to national and international E&P partners faster than the current failure in setting a scheduled paying plan.
  3. Building enhanced learning curves for drilling programs in different areas which enables more savings in new tenders.
  4. Building comparative performance and economic model between service companies participating in tenders, similar to this model, and between concession international partners.
  5. Economically concessions, local or international partners get +/- 50% of the production during the term of the agreement, in addition to the cost recovery; while in the Mexican model, the service companies get only the cost of drilling and completion.

By Hesham Ibrahim, Marketing Director-PICO Energy


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