On the Spot

Ivan Sandrea, Director General, CEO, Sierra Oil and Gas

February 2015

Q: What are the biggest obstacles to future growth in the country you operate, or Latin America as a whole, and how can they be overcome?

A: Sierra Oil and Gas is exclusively focused on Mexico, and as we all know, all obstacles here have been removed in an unprecedented manner. We need to appreciate that this is a major reform, it’s a complex industry and hence, there will be a lot of post learnings and adjustments which will be essential to remain positive about future growth in the long term. At this point, I don’t see any major obstacles but two important factors that will determine the success in Mexico in the future will be how active Pemex is in the initial rounds vis a vis new players and available acreage, and the implementation (and flexibility) of guidelines by the regulators in areas such as pre qualifications, speed of permitting, among others. From past experiences in countries as diverse as Brazil, Colombia, Norway, and Peru we know that some of the key success factors that enables a vibrant industry and future growth is creating open regular access to a range of diverse companies, data availability and a way to get data acquired in frontier areas, maintaining a transparent level playing field, promoting investment with fair terms and flexibility, and allowing safe operations execution in a timely way.  All considered I am very positive based on what I see today.

As for Latin America, the region is once again on the radar of the international and regional oil and gas industry, service companies, and policy makers. Secular changes in major oil and gas hubs such as Russia, North Africa, West Africa, and the Middle East, limited access to acreage in the traditional producing areas, as well as the lack of new exploration successes outside the emerging provinces such as East Africa and the Eastern Mediterranean, among others, have made Latin America an interesting place to re-visit. Yet despite substantial reserves and yet to be found hydrocarbons, the region is increasingly becoming dependent on imports of gas and refined products. In fact, the energy trade balance of major oil producers/exporters countries such as Venezuela no longer looks that favourable. Structural issues are likely to prevent any reversal of these trends across several countries in the years to come, unless radical reforms are enacted, as in the case of Mexico. It is now possible that Mexico will be a major positive force and an example for others to follow.


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