Eric Bustamante, OIS Corporation, Mexico
“The fact of the matter is that international newcomers are likely to seek out integrated solutions providers that can cater to a wide range of their needs, rather than a number of individual service providers. This demonstrates our commitment to generating value for our customers and partnering with them for the long haul,” states Eric Bustamante of OIS Corporation, Mexico.
Much has changed in the national and international energy landscape since 2012. What have been some of the Oil International Services’ (OIS) most notable developments since then?
OIS as an organization is firmly committed to its long-term vision. We aim to be acknowledged in the energy sector as the leader that offers the best-integrated solutions, which exceed the demands of our customers within the niches we participate. In doing so, we have dedicated all of our resources towards achieving this goal and, as a result, have been successfully able to consistently grow, both commercially and professionally.
We have also chosen to leverage our organizational core competencies and focus our efforts on a specific set of niches. As Mexico finds itself in the midst of a historic energy reform, we believe our selected market segments possess a great deal of growth potential for organizations such as ours, as well as for the development of the wider Mexican economy and society. We are dedicated to generating increasing levels of value for the industry and enhancing its overall competitiveness by introducing the latest and most efficient technologies and practices.
How would you describe OIS’s portfolio of services to those not familiar with the company?
Since the beginning, the vision of our company was, and still is, to become a leading integrated solutions provider to the energy industry. In our experience, we have seen that many companies tend to provide disjoined products or services as opposed to providing customers with complete solutions. This gap in the market inspired us to establish a company that can provide a comprehensive set of integrated solutions and turn-key projects in Mexico’s oil and gas industry.
With that guiding vision, we have for long focused on a particular set of market segments. These include the maintenance of dynamic equipment and auxiliary systems, fire and blast solutions, onshore and offshore engineering, construction, installation, commissioning, operation and maintenance services, as well as qualified labor supply, and offering turnkey/EPC projects. In addition to this focus, OIS offers consultancy services designed to help our clients not lose sight of their strategic approach, thus allowing them to accurately measure performance across all avenues.
In the fire and blast niche, for instance, some of our competitors only have the capacity to provide equipment to the client. They lack the capability to integrate the entire solution in terms of engineering, procurement and installation or furthermore, even aftermarket services. Clearly, this ability to integrate represents one of OIS’s key competitive advantages and organizational strengths. Going further, it represents a great growth opportunity for both OIS and potential foreign investors looking to come to Mexico. The fact of the matter is that international newcomers are likely to seek out integrated solutions providers that can cater to a wide range of their needs, rather than a number of individual service providers. This demonstrates our commitment to generating value for our customers and partnering with them for the long haul.
Do you see any growth opportunities outside of your current niche focus?
We at OIS like to take a pragmatic approach. As an organization, we are well aware of what our strengths and weaknesses are. We also like to leverage the fact that we are quite capable of creating value for our domestic and foreign partners.
With that in mind, we are continuously on the lookout for new opportunities that match our profile. For instance, we have recently consolidated a joint venture for new projects, together with a well-respected Mexican firm. After two years of hard work, this venture is finally taking off and we are most optimistic about its future.
OIS has expanded its reach beyond the Mexican market alone into the international market with a presence in the US. What is the strategic importance of that market for the firm?
Our presence in the US is primarily a result of the fact that Mexico is lagging behind the international industry in terms of technology and equipment. By contrast, the US is among the global leaders in these areas and our presence there is designed to grant OIS, and therefore our clients, with better access to both.
In addition to this reality, it can sometimes be rather difficult for foreign players to do business with Mexican firms that lack the experience of doing business abroad. There are many Mexican companies out there that do not understand the nuances of doing business in the US or other markets. For this reason, our US branch is set up as an international entity, managed by a non-Mexican, in order for them to develop their own natural capabilities and cultivate their own joint ventures.
Not only has our presence in the international area expanded our reach and diversified our operations, but it has also enabled us to anticipate our clients’ requirements and quickly provide them with the industry’s latest technologies and implement best practices. This is only possible because we do have a presence and are active in one of the world’s leading energy hubs: Houston, Texas.
International companies have spent many years of trial and error and countless funds in learning the best approach to the exploration and exploitation of oil and gas deposits on land, offshore, and in deep waters. Their organizations have evolved into a structure that is void of redundancies and which promote the effective and efficient utilization of methods and processes proven to successfully discover and exploit significant resource-rich zones, which, in many cases, contain complicated geological formations.
As evidenced by the few numbers of successful deepwater wells drilled by Pemex in the Gulf of Mexico adjacent to the US Gulf of Mexico territories that are covered with very productive deep-sea production drilling rigs, Pemex currently does not possess the necessary technology and experience to successfully tap this resources-rich environment. Mexico will only benefit from working alongside the international companies with a proven track record of finding and exploring huge oil and gas fields.
Although employing the latest technologies and equipment does lead to greater efficiencies and productivity, they also tend to be associated with cost premiums. To what extent is the Mexican ‘business’ culture prepared to pay a premium for cutting edge technology?
To the extent the cutting edge technology is a significant improvement in efficiency and productivity without a negative impact on quality, then once the improvements are verified, Pemex will incorporate such improvements. In my experience, Mexico has been open to considering technologies that translate into efficiency and productivity gains within certain parameters, and that receptiveness to cutting edge technology is one of the reasons for the Energy Reform.
Investing in innovation and R&D is another way to gain access to better technology and equipment. How do you anticipate these kinds of investments to change over the long term in the country with the liberalization of the market?
These kinds of investments will only grow over time with the Energy Reform being the catalyst for this kind of investment. To observe what has happened in the US with the shale oil and gas boom, and how those energy companies have applied new technologies and know how to further extract very significant oil and gas deposits from lands that had been previously explored and exploited, is proof of what better technology, equipment and know how can accomplish with the proper investment environment. If the Energy Reform is implemented successfully, the future portends exciting times for Mexico.
The Energy Reform, which was approved by Congress in December of 2013, has certainly generated a lot of interest from the global energy community. However, what do you make of this?
For OIS, the on-going Energy Reform can be viewed in two different ways.
On the one hand, we as an organization are focused on providing our client, namely Pemex, with the best possible industry practices, projects and solutions. That is our focus. Every year, Pemex allocates an annual budget for projects awarded through tenders or direct assignments. Our goal is to be an active participant of these competitive processes within the scope of our market segments.
On the other hand, as the Energy Reform is introduced and implemented, it will no longer be a case of business as usual. Newly formulated governing entities will introduce new practices that will be adopted by Pemex, changing the status quo.
For each of these consequences, there is a specific response strategy, but one thing is for certain. Mexican companies are going to face some serious difficulties as a result of the energy reforms. In contrast to OIS, they simply lack the experience in forging alliances, at a national or international level.
What are the main challenges and opportunities facing OIS Corp?
There are two sides to this coin. On the one hand, we have to adapt our business in order to keep pace with the energy reforms and anticipate the challenges and opportunities it introduces. On the other hand, we must also assess the potential and benefits that can be derived from forming strategic alliance with prospective investors. However, the real challenge will be in combining the two together and making them work.
These are the types of projects we at OIS like to pursue. For this reason, we are dedicated to seeking out the right international partners with which we can team up. We are confident that such an alliance could result in a mutually beneficial venture. Once that happens, we will be committed to seeing it through, in the good times and the bad.
How would you like to position OIS in the Mexican and international market and what are your ambitions for the future?
We are always on the lookout for new opportunities with prospective partners. Assuming that they are in the market for a partner that is dedicated to its business, employees and stakeholders, OIS is the perfect candidate.
Simultaneously, as we continue along our growth trajectory, we are on track to break all our performance records so far and foresee great opportunities in the future. Of course, as with any fast growing and ambitious organizations, we have set the bar relatively high for ourselves. Only by pushing the boundary will we be able to truly evolve and develop our company into the world-class services provider for the energy industry.