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with Alejandro Martín Audelo, Alejandro Martín Audelo

01.09.2011 / Energyboardroom

London Offshore Consultants has been present in Mexico since 2004. Could you please tell our readers what is the company’s position today and what have been its main developments in the Mexican market?

LOC Mexico is a leader providing Marine Warranty Survey (MWS) services in the country. We also provide specialized marine consultancy and surveying services to the maritime industry. Our reputation in the market is based in our independence and the quality of our services. We are frequently involved responding to major marine casualties and maritime legal cases.Our main assets are our people, our independence and our reputation that result in our company value. In 2004 the Ku-Maloob-Zaap development was at early stages and it was therefore a perfect timing for us to open the Mexican office as this allowed us to offer MWS services to Pemex. MWS is the main service we provide in Mexico. On a worldwide level, it represents 50 percent of the group’s revenues but here in Mexico, it accounts from 80 to 90 percent of our revenues. MWS consists of the certification on behalf of Underwriters of the marine operations in offshore development construction projects. This is a requirement established by Underwriters where they take the risk of a construction project in order to cover for any incidents. Because the complexity of these projects, they seek the certification for certain portions of the work, which basically are the marine operations. For marine operations we refer to activities conducted at sea or in the interface between land and sea – such as structures transportation and installation and pipe laying. These marine operations are required to be certified by companies like LOC in order to comply with the requirements of the policy established by the Underwriters. If the certification is not provided, the coverage could be jeopardized. In Mexico Pemex, who is the insured entity, conducts the offshore development projects. However Pemex’s contractors are at the end the responsible to conduct the operations and therefore, the ones that must provide and comply with the certification requirements. Planning is the key to obtain the certification: we therefore review all the procedures, manuals and design produced for the operations and check the condition of the equipment in advance. In this way, we make sure that good practices are followed and maintained, and that the proper equipment is used. By proper equipment we mean that the equipment can be used under its working limits. However, sometime it can be very complicated to determine this working limit. For instance, it is very easy to define for a piece of cable or a shackle its working limit. However establishing working limits for a vessel is a very different story. Once the planning and equipment review is completed, we then proceed to attend the operation and review the preparation work. When everything is ready to start we issue the certificate. We remain on site to witness and verify that the operations are executed following the approved procedures.Pemex and the contractors knew this process before we established the office. However, it was during the KUMAZA development when our role obtained better understanding and appreciation by Pemex and the contractors. Our participation in the review of the NRF-041, which is the standard established by Pemex for the load-out, transportation and installation of marine platforms, is a good example of our participation with Pemex in improve the industry practice in the country.

Mexico is clearly dominated by Pemex. How does this influence your activity?

Our services are always oriented to the Client. We aim to identify the Client needs and expectations and customize our serviceAs I mentioned earlier, MWS is a requirement of Underwriters. Our role is oriented to satisfy the insurance conditions, so our conceptual Client is actually the Underwriters. However, we consider the insured as a Client because we believe our involvement in the projects shall add value, and the only way to make this happen is collaborating with them instead of just assume a ruling role.For large and complex offshore oil and gas developments, Underwriters recognize internationally few firms and we are one of them. Under this dynamic, Pemex (or the insured) sometimes has not many choices over who will do the job. In the case of Pemex, we were very diligent in identify their circumstances and provide services that address many of the issues we observed in the Pemex operations. The principle in this approach is simple, but it takes time and patience, as Pemex is a very complex company with different driving interest.

How did you achieve that?

We decided within the group to have a Mexican citizen to run the office and always try and be sensitive to the requirements of the client and the environment. It is important that we understand the environment since Project development involves a huge investment and we like to be part of the solution, and not part of the problem. From 2004 up to 2010, we were involved in more than 2,500 operations where certifications were issued. This implies we certified more than one operation every single day! Of course, this was not really the case but we did have a lot of simultaneous operations either in the same location or at different places. We have also surveyed close to 300 vessels. Surveying those vessels has enabled us to gain a significant knowledge of the vessels that are usually involved in the operations, their features and how they perform. We know what they can do and what they cannot do and that gives us a good position that benefits our Clients. It is important to highlight that we refer not only to supply vessels but also mostly to crane vessels, barges, tug boats, construction vessels and diving vessels.

With all these developments, how important are the Mexican operations for the overall company?

The Mexican operations are very important. To give you an idea, revenues by staff are the highest. Also, we were the most profitable office for several years and we are still in the top 5 offices of the group. Our perspective in the Mexican market is to keep this status for the next 5 years. The Group views Mexico as the country that still has a huge untapped potential and the expectations are to resume again workload levels that we had in 2006, 2007 and in 2009. Even in the peak of the recent economical crisis, 2009 was the second most successful year for our office. We did however experience difficulties at the end of 2010 and the beginning of 2011, but we have compensated our results by supporting our London office’s projects in Angola and Nigeria.

The company specializes in international marine and engineering consultancy to the world’s shipping and offshore energy industries. In this niche what are the main hazards associated with the Mexican oil and gas industry?

There are indeed problems in the worldwide oil industry development. We can for example mention the explosive and inflammable nature of the fluids handled – hazards that create explosions, fire and pollution. In the case of Mexico, a part from these hazards, we can also include poor planning and engineering, as well as the poor quality of the work conducted. Some people would challenge this view, however it is certain that we could do better. Also, the Gulf of Mexico is a region exposed to environmental and natural hazards, such hurricanes, earthquakes and cold fronts. These hazards have prove to be very destructive in the recent years and need proper anticipation from the people involved in the offshore operations.Other hazard is the huge dependency on the technology involved in doing the operations. Unfortunately there are still contractors that use old equipment and vessels that beside the limited efficiency in the operation they introduce a risk factor that could be avoided if the contractor approach is modified.And last but not least, the human factor is an issue. The equipment is good as much as the people that operates it.

Talking about people… in this kind of industry, how difficult is it to find and retain the best crew?

It is difficult to find the right people. When we recruit we valuate five aspects. First of all the prospective employee has to have knowledge and significant experience. Secondly, he has to have the understanding of our work and role. Thirdly, he has to have leadership skills to communicate, negotiate, and deal with his counterparts. Fourthly, he has to be able to use a computer and has to know common IT issues. Finally, he has to be fluent in English. How many of those people can we find in this country? So far not as many as we would like to, but we keep looking and maintain a constant watch on the people that could be a good prospect for our team.

If we come back here in five years, what are we going to see?

I believe that in five years time, our Mexican operations will not be much bigger than they are now. As a company, we will still be focusing mainly on Mexico and Brazil, and perhaps in a near future we could have some other offices in South America. I hope that in five years time, we will operate in Colombia, Venezuela or Peru. However, it depends on how those countries develop offshore oil fields. Personally, I see great potential in Colombia because they are establishing a good business environment to attract foreign investment. I believe that Colombia has great prospects and conditions even if it is not a key oil and gas player in South America. Peru is also promising and its operations are expected to increase in the medium term.On the other hand, we also see good prospects for another company of the group – Longitude Engineering de México that was established in 2008. The company’s main focus is in naval and marine structural engineering but we also can produce electromechanical engineering. Hence with the new opportunities that the Mexican Oil & Gas industry is giving, we have interesting growth perspectives.

As a final message what would you like our readers to know about the Mexican Oil & Gas industry?

There are two big challenges in Mexico. The first is to secure reserves before we deplete them. This is going to take a lot of changes in laws, as well as significant investments that we do not have but need to attract. The second challenge is associated with changing minds. We will need thousands and thousands of skilled people to do the work. Thousands of qualified persons that we do not have at the moment and that, we cannot rely on bringing them from abroad, because other countries will have their own needs to solve, beside the fact that bringing foreign personnel would be very expensive. As a country, we really need to make a bigger effort on increase and train people at all levels, so that Mexico can further succeed and enhance its Oil & Gas industry.



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