Earlier this month, oilfield service companies Petrofac and Schlumberger announced that they had formed a new alliance to provide production related service to national oilfield companies. To hear the names of these two companies in the same sentence is nothing new in Mexico, given that they were the two firms awarded contracts in the first round of integrated service contracts, and indeed, Mexico might be one of the first places where this new alliance bears fruit. As well as other countries in Latin America, both Schlumberger and Petrofac have expressed interest in cooperating together in Mexico. The timing is perfect, as both companies will this year begin development on their Mexican projects, whilst at the same time, new integrated service contracts have just been announced for Pemex’s northern region, as the CEO of Schlumberger Paal Kibsgaard drew attention to in the company’s end of year results call.
The company’s different strengths play well together in partnership. While Schlumberger is well known for its strengths in drilling and production enhancement, Petrofac is highly regarded for its surface design, installation and operational abilities.
It is unclear whether the alliance will have any bearing on the projects that the companies won in 2011 in Mexico, but it seems that the focus will definitely be on future projects that can be jointly bid for. Andy Inglis, the head of Petrofac’s Integrated Energy Services division that won the two contracts in Mexico, was quoted as saying that the alliance would help the companies bid for larger projects that would normally be out of reach of both companies, and to develop these projects at a faster pace. This move places the companies in a position that has traditionally been reachable only by major oil companies, and has large implications for global oil markets.
Another interesting alliance to make the news this week is that of Pemex and Repsol. The two companies announced that they had reached an industrial agreement that should put an end to the six months of confrontation between the two oil majors. In return for Pemex agreeing to maintain its stake in Repsol between 5% and 10%, the two companies have agreed look for opportunities to cooperate on projects in the future. This will happen without exclusivity, with Repsol acting as partner to Pemex in evaluating and promoting business opportunities within the restraints of the Mexican constitution. This alliance will last for 10 years. It seems that after six months of trying, Pemex has finally got what it wants: a partner with experience in deepwater operations that it can count on to help develop new business and offer its expertise where needed. In return, Repsol now has assurances for the next decade that Pemex will not try to overly influence the trajectory of the Spanish company.
These two deals bode well for Mexican oil and gas in 2012. Pemex finally has access to the partner it needs, and the two companies that signed the first integrated service contracts in the country have agreed to work closely together in order to develop projects more quickly and innovatively.