Cotemar sees bright future for Mexican petro biz despite challenges

Over the last decade, the deep-seated problems in the Mexican oil industry have become ever more difficult to ignore. With traditional extraction methods quickly failing, oil sector job cuts have become an all-too-familiar refrain. Not spared from the carnage, petroleum services giant Cotemar was forced throughout 2016 to lay off over 2300 of its talented workers. As with all other petroleum services companies, they had no choice in the matter. Since 1938, the fate of subcontractors in the Mexican petroleum space has been tied inextricably to state-run oil monopoly Pemex.

In boom times, the price of such an incestuous bond is hidden and the enormous windfall from complete domestic retention of all revenues from massive petroleum exportation on clouds the minds of all who participate. Yet since at least 2004, the structural problem of artificially imposed self-sufficiency is becoming apparent. The era of Mexican easy oil is over and in order to exploit the significant crude remaining in the ground, foreign capital, expertise and equipment will need to be sought.

An ailing system’s demise nourishes new growth

For years, savvy observers on had been predicting dire consequences for Mexico’s petroleum industry once the easily extracted reserves were depleted. The veracity of those predictions first became apparent in the mid-90s when natural gas quantities began running perilously low across many of Mexico’s most productive fields. Years of wellheads blowing off pressure had depleted the natural gas component of high-yielding deposits such as the Cantarell field. This caused the wells to fail and was only solved through the then cutting-edge technology of nitrogen injection. The new nitro-injected wells quickly surpassed all records and things were looking up. But then the real crash came.

Once the nitro-injection stopped working Mexico experienced an historically precipitous decline in oil production on Soon, Pemex was facing insolvency. Something needed to be done fast.

In 2013 president Nieto oversaw sweeping reforms including a rewrite of entire sections of the Mexican constitution, allowing for private investment and foreign involvement. Today, Mexico is poised to open its petroleum market to the expertise and capital of foreign firms, firms with proven track records of extracting the kind of oil that could put Mexico back on the leader board of world oil powerhouses – hard oil.

As Mexico opens up to the dynamic world of global Big Oil, Cotemar is in the unique and fortuitous position of being the largest petroleum services contractor with the deepest project experience of perhaps any firm in Mexico. The challenges for the Mexican petroleum industry thus far have been tough. But Cotemar sees a bright future, not just for itself, but for the Mexican oil business’ greatest project – Mexico itself. Source: