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Electric (GE) – Gabriel Cerdio, Executive Director of Global Accounts (Pemex) – Mexico

07.08.2014 / Energyboardroom

The executive director of global accounts speaks out about how the company is overhauling its processes and modus operandi to bring faster solutions to market and to respond to the evolving critical needs of primary client, Pemex. He also sheds light on the nascent Mexican shale gas industry explaining why he believes the conditions are ripe for Mexico to emulate its neighbors success in unconventional energy and how Texan firms are likely to become main beneficiaries from the opening up of the Mexican shale market.


Congratulations on becoming executive director in February. What’s been keeping you busy since your recent appointment?

My main focus is to develop a sound strategy to hone the opportunities arising from the Energy Reform. GE has traditionally positioned strongly with Pemex in areas like turbo machinery and surface equipment. In this new era we want to take advantage of the huge breadth of GE’s portfolio – which has grown through several acquisitions – to significantly expand our presence across the O&G value chain in Mexico.

Our strategy has several angles but technology is the definitely its main pillar. GE O&G just signed a Technology Collaboration Agreement with the IMP and Pemex because we want to not only bring our best products, but go a step further in understanding Pemex most critical needs and co-develop specific solutions. I am also focused on ensuring we have a simpler, faster way to bring our solutions to market.

Tell me more about simplifying your modus operandi?

GE is a very big company with multiple lines of business across several geographies. Because of that our organization follows a matrix model that sometimes is not easy to navigate for our customers. GE alone in Mexico, for example, has almost 20 business units doing business with Pemex. And it’s not only O&G; we also have business opportunities covered by our Power & Water, Energy Management, among other. This complexity should not be felt by our customers…we must react swiftly by improving our frame agreements, expanding delegated authority at the local level, simplifying our procedures, relying more on IT, etc.

Mexico is GE’s second largest market in Latin America (after Brazil) and largest outside the US in terms of manufacturing. We also hear that Raul Gallegos aims to double the business of GE in Mexico over the next 5 years. What is the strategic importance of Mexico to the GE’s regional / global operations and growth prospects?

The Brazilian market is obviously impressive in numbers and volume and there is a strong focus to deliver in that market. However, in the medium term Mexico provides a promise as large as Brazil and our leadership is strongly interested in diversifying their strategy in the region to capture the opportunity. We have been in Mexico now for over 118 years and are ready to continue investing to strengthen our presence.  This means growing our manufacturing and service footprint, expanding the role of O&G in our Queretaro Engineering Center (GEIQ) and growing our commercial capabilities. On the latter, for example, GE recently acquired Lufkin to complement and accelerate our presence in artificial lift solutions. Given the profile of Mexico‘s oil fields and the relevance of mature fields, we are putting local resources to grow this market.

Can you please tell us a little about GE’s current flagship projects such as your contribution to the Etileno XXI petrochemicals plant? 

We participated in this project providing the full power plant solution. It was a great example of our “One GE” philosophy because we were able to draw from our expertise and technology of both our Power & Water and Oil & Gas divisions to provide a state of the art power solution to Braskem. Beyond our product and service offering, we brought our unique financial expertise to help secure competitive financing through an export credit agency.

What do the energy reforms mean for GE in terms of new opportunities?

Short term it will continue to be a conventional play, both onshore and offshore, providing solutions for mature fields. Here for example we are well positioned for surface equipment, artificial lift, and both power generation and compression solutions. What will definitely change is our customer base, where we see an increasing number of mid-sized firms (local and global) participating in the market. We are adapting our business model to cater also to these firms, where integrated solutions with financial plays will be increasingly recurrent.

Also in the short term we see substantial activity occurring downstream, with several projects being launched by Pemex with significant CAPEX programs. Many of these are not necessarily dependent on new rules or private investors, and we can provide strong value working alongside EPC’s to help improve the efficiency and productivity of the existing refining plants. Our capabilities include a wide range of compression and power generation solutions, as well as a host of other products.

Once the deepwater market starts to develop in the medium term, we are fully equipped with solutions for subsea including drilling and production equipment and services.  This will be of course a critical part of our strategy given the large CAPEX required to develop this market.

Both conventional and unconventional plays benefit from our measurement and control portfolio, which allows our customers to have more and better information real time about the performance of their equipment both upstream, midstream and downstream.  We will drive an increasing penetration of what we call the “industrial internet” will change operations and maintenance paradigms, providing substantial value to our customers.

Finally, decisions around local content rules will be of course very relevant for equipment firms like ours; current discussions talk about levels of about 35% for certain segments which will require us to adjust our strategy. At GE we are well positioned to grow our footprint where required, recognizing both the strong prospects for a robust internal market as well as excellent conditions to develop manufacturing hubs for the region in certain products.

Your global CEO Jeff Immelt has identified shale as a strategic priority and wants to position GE as leading the shale gas revolution. What is Mexico’s shale potential and how does GE intend to take advantage of these opportunities?

The situation concerning shale gas is starting to become clearer as Pemex realizes it’s going to be tough to play a relevant role in that market. Pemex can and should be fully involved in other areas such as deep water where they can credibly develop capabilities and learn alongside major partners. However, the flexibility, speed and risk taking capabilities required to succeed at shale, however, are not well aligned to Pemex’s strengths.

Mexico represents one of the top five countries in shale reserves potential. We believe that the Mexican shale sector will benefit from several positive externalities that will allow it to develop quicker than other markets. Examples include proximity to the US, a well-integrated supply chain and customs processes and infrastructure, as well as strong service firms well-equipped to work at both sides of the border. One aspect where we think the government should double the effort is of course on security, given the high concentration of shale reserves in areas of current conflict. Although it has not deterred many firms to do business, it does affect key success factors in this business like cost competitiveness and speed.

At GE, we are close to opening another Global Research Center in Oklahoma which will be focused on solely on O&G and will have a strong focus on unconventional fields R&D, including shale gas. At that Center GE is building a world-class team to develop new technologies and processes that will transform our energy system – making it smarter, faster, cleaner, safer, cheaper, and more efficient. We in Mexico will of course be able to leverage both this center, the new one about to open in Rio de Janeiro and our engineering center in Queretaro to tap on the Shale revolution.

What are your personal priorities going forward? In what state will GE Mexico be when we next interview you in a few years’ time?

When you interview next time I hope to deliver great news about double digit growth across all our O&G business units. I hope to have exceeded our customers’ expectations through unique solutions and innovative technologies, and demonstrate evidence of growing win-win relationships with Pemex and new players in the industry. Finally, I hope to showcase a growing local footprint and more value-added engineering jobs for Mexico.


To read more articles and interviews on Mexico, and to download the latest free report on the country, click here.



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