Tom Faichnie, partner and energy group member at Scottish independent accountancy firm Campbell Dallas LLP, discusses the opportunities for export of skills and technologies to Mexico as the country opens its doors further to international oil and gas operators and service companies.
International oil and gas operators are used to changes, some geographical and many financial. New legislation in Mexico has opened doors into a culturally different but rather familiar location that could be worth millions to both the local economy and global business.
The Gulf of Mexico has long been established as an exploration and production territory, but there is now a chance to dual business between the USA and its ambitious North American neighbour Mexico. The Mexican Senate has voted through changes to allow foreign companies access to its estimated 10.3 bbl reserves.
While a significant amount of focus has been placed on Brazil, Mexico is quickly becoming a place of real business interest and is seen as an easier place to do business than many of its Latin American neighbours.
The Mexican government’s latest move is of historical significance because for more than 75 years the country’s industry has been nationalised through Pemex. There are still supervisory governmental controls, but it is a step which welcomes the skills and experience of the world.
North Sea professionals have had no problem exporting themselves, their ideas and equipment worldwide. Mexico simply provides a new frontier for their influence. Aberdonians who are Green Card holders and based in the USA are already taking pioneering steps south of the border. By coincidence, Scotland and Mexico share similar tax systems so I foresee this inward investment continuing.
Mexico remains one of the top 10 oil producers in the world. It is an important domestic trade partner for its North American and Central American neighbours, providing more than 70 per cent of its oil exports to the USA in 2013, according to US Energy Information Administration figures. Mexico has an increasing domestic demand for hydrocarbons as well as dwindling proven reserves.
The government is actively seeking collaboration with international partners to allow it to make the most of what it has by using technologies developed overseas to extract harder to reach oil while also finding new reserves.
Mexico is welcoming the world, this can only be good news for UK businesses which are already exporting their expertise and equipment. It will be equally important to companies looking into export markets to progress. Those companies which establish a foothold in the country as the new open production culture develops will undoubtedly reap the rewards.
The spending power of oil majors the world over is also matched by the disposable income of workers in energy hubs, including Aberdeen, the Gulf of Mexico, the Middle East and Western Australia. This boosts economies and creates melting pots of creativity and networking. This drives technological advances to make hydrocarbon recovery cheaper, faster and safer.
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