The winning companies from Round One L-03 were recently announced, and it was no surprise to see Grupo Diavaz in the list. The oilfield service company has been acting as an operator since 2003, something Diavaz had to learn on-the-go in order to overcome several obstacles. Luis Vázquez Sentíes, Chairman of the Board at Grupo Diavaz, frequently says his company is an operator ‘a la mexicana’, making reference to the Mexican people’s ability to improvise and accomplish tasks based on creativity rather than formal training. The Energy Reform created the conditions for Grupo Diavaz to make the jump and turn into a formal operator, which the company will do now that it won the Barcodón and Catedral fields in Tamaulipas and Chiapas respectively in Round One L-03. The following is an excerpt from an interview MOGR did with Vázquez Senties before the winners of the third phase were announced. Given the two contracts awarded to the company and the contracts it will migrate soon, Grupo Diavaz is poised to become an important operator and a powerful name in the Mexican oil and gas industry.
Q: You have previously shared your desire to become a full operator. One of the best opportunities to accomplish this was through Round One. Why did you decide not to participate in the first two phases of Round One?
A: It is important to consider that Grupo Diavaz has no experience operating offshore fields. We sought and found an experienced partner, but the conditions were not affordable. After thorough assessment of the tendered fields, we decided not to participate. Players coming to Mexico do so with the intention of producing oil. Grupo Diavaz, on the other hand, already has fields in production, so the conditions are different. We would definitely have liked to participate in Round One L-01 and L-02, especially because we would have gained much-desired knowledge and experience in operating offshore fields from our potential partner. However, the potential risks were too significant.
Nonetheless, I am not concerned because once our contracts are properly migrated, Grupo Diavaz will be producing 25,000 b/d. It will take less time for this to happen than that required by the five winners of Round L-02 to begin production. By not participating in the shallow water phase, we have had time to focus on other potential projects and contractors, and study other fields. Grupo Diavaz qualified for rounds L-01 and L-02, but we decided not to follow through because of the level of risk involved. Achieving this means we have learned the right lessons, which we will apply in the near future. In fact, we will participate in L-03*, as we are looking at four large blocks out of the 25 that will be tendered.
*Grupo Diavaz successfully won two fields in Round One L-03
Q: Is Grupo Diavaz interested in PEMEX farm-outs? What would be the attractiveness of a farm-out compared to the blocks tendered in Round One?
A: Absolutely, and we are already analyzing the opportunities. A farm-out entails partnering with PEMEX, with whom we have worked with for years. As opposed to Round One, the fields are already in production, enabling us to get started in a six-month period. There are fields we know have attractive resources because we have worked in them for some time. Forming alliances would be a good option, so we have been talking with companies from all over the world, from Russia to the US, who already have offices in Mexico.
Q: What will be the pillars of Grupo Diavaz’s mid-term growth?
A: We definitely want to become an operator, but the migration has taken longer than expected. Once the migration is completed, Grupo Diavaz should be producing 25,000 b/d, so we are eager to begin. Even though PEMEX continues to pay for our services, we manage the fields as if we were the official operator, which entails looking for the most suitable technologies at competitive prices. In addition, we want to win a block or two at some point in the near future through the tendering processes. There will be plenty of new and even some inexperienced players joining Round One L-03, some of which believe being an operator means having plenty of capital and subcontracting everything. This is far from the truth, and in my experience, they will lose a lot of money by taking that approach. We, on the other hand, have been investing time, money, and education since 2003, when we began acting as an improvised operator. We can be proud because we have delivered our contracts in time, increased reserves, delivered on production, and invested in new technology. In this sense, we are eager to become operators in our migrated contracts and win at least two blocks in tenders by next year.