In It to Win It

What is the significance of Mexico for Shell following the country’s reforms to its oil and gas sector?

Before the reforms, Mexico was not a part of our global portfolio in terms of hydrocarbons E&P because the law did not allow it. Now that the law has changed, Mexico is definitely part of that mix. When Shell looks for opportunities to invest across the globe, Mexico will now be one of those opportunities. Shell has been present in Mexico for 62 years even though exploration and commercialization of oil was not permitted for private companies in the past. We have specifically allocated work teams for Mexico, and we firmly believe in the country; however, we still assess all markets we work in before placing any investment at all. Mexico is important for Shell, which is why we are here and have been for so long. In the end, projects have to make sense. It is difficult to say where Shell will be in Mexico in the short term before we know the actual opportunities and put in a bid; however, we are here for the long run. This is just one bid round of many to come.

What factors does Shell consider when assessing whether Mexico is a competitive place to do business?

There are several factors that we examine. The first has to do with the reality, which means knowing what lies in the subsoil and evaluating the opportunities. Mexico has been a closed market for oil companies for many years; we still have to learn much and evaluate what is in its subsoil. Another factor is that terms and conditions ultimately need to be competitive—they have to be in accordance with global regulations and ensure an even playing field. The country needs to allow all companies to come here and participate transparently, which so far has been happening. All this has to match up with the funds we are able to invest here given the market conditions.

Has the fall in the price of oil changed the attractiveness of Mexico for Shell?

We evaluate all our projects for the long term. The fall in oil prices has a short-term impact in the sense of significantly reducing revenues. We do believe the long-term projects in deep water in Mexico and elsewhere make sense. However, there is an impact in the short term because we have less revenue to finance such long and expensive projects. This industry is highly cyclical, and the current downturn is nothing new to us. However, we have learned to take something positive out of it. It is an opportunity for us to reduce costs and spend wisely.

Shell is the second largest player in the world in the energy sector. What role can Shell play in building more capacity in Mexico?

It goes through stages. Local content is something we feel strongly about, and in Mexico, we have had a huge interest in local content even before the reforms were approved. We decided Mexico was competitive enough to participate in our projects globally, and we opened a strategic sourcing office here. Mexico already has significant advantages because of the quality and competitiveness of its workforce and its proximity to the US market. We expect to attract some of our partners abroad to come and establish themselves in Mexico, expanding the supply chain here and gradually progressing into more manufacturing and technological activities with great added value.

Where do you think Shell Mexico will be in 10 years?

My personal goal is to make Mexico a kind of heartland for Shell. I would like us to be successful and partner with the country and make sure we establish a long-term relationship here. Also, we want to help Mexico develop and deliver its own energy needs. We would like to be a force for good. We want to create well-paid jobs, increase the supply of oil in the country, and help Mexico develop further.