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U.S. Gulf shipyards, operators stand to gain business south of the border

Sep 3, 2014 03:14 PM
Hornbeck Offshore Services’ platform supply vessel HOS Ridgewind undergoes sea trials in the Gulf of Mexico in 2012. Hornbeck, which has a dozen vessels under contract to work in Mexico, and other U.S. companies anticipate gaining business as Pemex turns to foreign operators to upgrade its offshore fleet.

Brian Gauvin

Hornbeck Offshore Services’ platform supply vessel HOS Ridgewind undergoes sea trials in the Gulf of Mexico in 2012. Hornbeck, which has a dozen vessels under contract to work in Mexico, and other U.S. companies anticipate gaining business as Pemex turns to foreign operators to upgrade its offshore fleet.

U.S. maritime businesses anticipate more work in Mexico, but they face competition from other foreign enterprises.

Energy reforms passed by Mexico’s Congress in December ended a 75-year grip by state-owned Petróleos Mexicanos (Pemex) and will allow direct private investment in the nation’s oil and gas sector. Foreign vessel builders, including those along the U.S. Gulf, expect to land new business in Mexico.

“We’re waiting to see how the big oil companies respond to Mexico’s reforms,” Richard Sanchez, senior marine specialist at IHS Petrodata in Houston, said in late May. “Chevron and Russia’s Lukoil appear to have the most interest. If the oil companies see enough incentives, they’ll want to drill in Mexico. And that will mean work for their suppliers — including vessel builders along the U.S. Gulf.”

Mexico’s Congress was considering secondary laws this summer to implement its 2013 reforms. After that, private capital and technology could flow into Mexico’s offshore oil and inland shale sectors.

In 2012, Pemex said it needed to upgrade its fleet. Last year, Pemex acquired a stake in Spain’s Hijos de J. Barreras (HJB) shipyard, and contracted with Singapore-based Keppel Offshore & Marine to build and operate a shipyard at Mexico’s Port of Altamira in Tamaulipas state. This spring, shipbuilding was revived after a 21-year hiatus at Veracruz-based Talleres Navales del Golfo (TNG), which repairs vessels and does fabrication. TNG will build tugs for Pemex and Mexico’s Naval Secretariat.

Companies along the U.S. Gulf expect to gain some ground in Mexico. “We’re setting up a JV partnership with a Mexican national now, and it will be announced soon,” Shane Guidry, chairman and chief executive of Harvey Gulf International Marine in New Orleans, said in May. “We don’t do business directly with Pemex but plan to soon through our joint venture.” He didn’t disclose details of that partnership.

Hornbeck Offshore Services in Covington, La., is already more active in Mexico. “We began working in Mexico in 2002 and currently have six vessels there under long-term contracts,” Hornbeck said in 10-Q filings with the Securities and Exchange Commission on May 9. Hornbeck’s dealings are mostly with Pemex.

In the first quarter of 2014, Hornbeck was awarded a contract for six more vessels, slated to start in the second quarter in Mexico’s offshore. “We will continue to actively bid additional vessels into Mexico as tenders are issued by Pemex and by joint ventures,” Hornbeck said in May.

Allegations of fraud against Oceanografia SA, one of Mexico’s top offshore vessel operators and a chief provider of services to Pemex, could help other firms. In its May 10-Q filings, Hornbeck said Oceanografia, based in Ciudad del Carmen, is a principal Mexican competitor. “As a result of these allegations, we anticipate additional opportunities for our vessels to provide offshore services to Pemex,” Hornbeck said.

In February, the Mexican government took over management of Oceanografia. Citigroup suffered a $360 million loss on loans to Oceanografia because of allegedly falsified Pemex approvals.

Foreign investors are optimistic about deepwater in offshore Mexico, which is primarily a shallow-water market now. “A significant decline in shelf production is driving long-term market potential for deepwater,” Hornbeck said in May. Six floating rigs and 42 jackup rigs were drilling in offshore Mexico in May. Pemex plans to add 17 more high-spec jackup rigs during 2014.

Meanwhile, other U.S. firms active in Mexico, including Edison Chouest Offshore, Tidewater Marine, Otto Candies, Aries Marine and GulfMark Offshore, are being watched for new business south of the border.

“U.S. boatbuilders are very busy now, but by next year’s second quarter they may be looking for work from Mexico, Brazil and West Africa,” Sanchez of IHS Petrodata said.

In 2012, Pemex said it would replace 132 ships at a cost of $800 million. Some of its vessels were more than 30 years old. Within Pemex’s fleet, 81 ships assigned to exploration and production are to be revamped or replaced by 2015, and 51 vessels in the company’s refinery division were slated for renewal in 2013 and 2014.

Last November, Pemex’s PMI unit said it would acquire a 51 percent share in Hijos de J. Barreras shipyard. “The deal opens the way for the development of capabilities in the medium term for the construction of specialized ships in Mexico — allowing the petroleum industry, among others, to benefit from the technological development of the Galician shipbuilding sector,” Pemex said.

Last October, Pemex subsidiaries partnered with Keppel to build and operate a shipyard at Mexico’s Port of Altamira to support offshore oil and gas. Construction will occur in phases at a cost of $400 million and should create 4,000 jobs. The first phase is expected to focus on building six KFELS B-class jackup drilling rigs. When the facility is complete, it will repair drillships and offshore vessels, make conversions and do fabrications.

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