It has been a year of surprising elections so far. A historic change in Malaysia. Imran Khan in power in Pakistan. And Mexico veering left by electing Andres Manuel Lopez Obrador – also known as AMLO – embracing nationalistic and socialist policies after Peña Nieto embarked on a liberalisation drive that busted open long-held monopolies.
The election presages possible changes in Mexico’s energy sector, threatening to undo the gains triggered when former President Nieto broke state-owned Pemex’s dominance in both upstream and downstream. The result? Foreign investment soared. The retail sector was the first to see major change – Shell, BP and even Glencore have set up fuel networks. Pipelines were next, with American firms rushing to connect the US Gulf Coast to energy-hungry Mexico. Net imports of fuel are rising, but that is a symptom of an ageing and ailing refining industry. In upstream, Mexico has offered up blocks for auction to private players over the past two years, attracting plenty of interest from firms like ExxonMobil and Chevron, especially in the deepwater Gulf.
That may change now. AMLO is more protectionist, and indications of his policies when he assumed Presidentship on 1 December 2018 show that he wants to reinstate (some) power to Pemex. He originally vehemently opposed the breakup of the state’s stranglehold on the energy sector, and though he has moderated his position, he still wants the state to play a bigger role than envisaged under Nieto. AMLO reportedly wants to suspend all oil auctions for two years, possibly up to six years, after two successful auctions with high foreign participation. He also wants to review all 107 E&P contacts already awarded, weaken the new technocratic approach at the national regulator, make Pemex the sole marketer of all fuels (included volumes privately-produced) and allow Pemex to choose its upstream private-sector partners, rather than be paired up with the highest bidders. In short, AMLO wants to turn Pemex from Pertamina to Petronas.
It could go even further. AMLO also wants to roll back the new oil and gas laws, a change that would go beyond adjusting current legislation to creating a new law. That is a lot tougher, as it requires a change to the constitution, which is difficult given the fragile state of politics in Mexico. Raising local content rules is also in the works. This is a move that always rankles foreign investors, taking Pemex in the direction of Petrobras – once lauded, but beset with graft scandals brought about by corruption practised between domestic players; but unlike Petrobras, Pemex does not have the lure of vast pre-salt deposits.
This could be a disaster. The supermajors and majors began re-entering Mexico after a long absence in 2017 because Peña Nieto created an environment conducive for them. Rolling back those changes could drive them away, and their much-needed capital. Pemex, like Pertamina, is in no position to fund AMLO’s ambitious plans for Mexican energy. It needs foreign expertise, and crucially, foreign money. To take Pemex towards the standard of a Petronas or Saudi Aramco is a great and laudable ambition; AMLO’s policies are not the way to achieve that.
AMLO’s targets for Mexican energy
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Headline crude prices for the week beginning 5 November 2018 – Brent: US$72/b; WTI: US$62/b
Headlines of the week
It is a well-known fact that the oil and gas industry has a lot to offer in terms of opportunities - paycheck, lifestyle, and work-life balance. However, like everything else in life, it has a flip side as well. If you are planning to make a career in oil and gas industry, it is important to know the cons as well. Here is a list of risks associated with working in oil and gas industry that you must know to make an informed decision.
Highly competitive: survival of the fittest
Oil and gas industry is highly competitive and dynamic in nature. The job requires high level of expertise and productivity. With digitization and automation of the industry, the work functions are changing rapidly. The employees who cannot cope up and upskill with changing time and need will be automatically pushed out of the system. The foremost challenge in oil and gas industry is to stay relevant and keep upskilling.
Long work hours
Some job functions in oil industry like offshore rig workers have to work in 12-hours shift, seven days a week and for seven to 28 days in one stretch. Sometimes, overtime is also expected due to emergency or to manage the project deadlines. However, the oil companies do give equal amount of resting period to the rig workers to compensate for the long working hours. Even then, the continuous long hours is strenuous for the workforce.
The accident-prone work environment
Although rigorous safety trainings are provided to the workforce along with numerous safety measures and laws in place; accidents do occur. Sometimes, these accidents can be life-threatening. Here is quick overview of the possible accidents that you might encounter:
Risk of confined space and fall- The line workers in oil and gas industry sometimes work in confined spaces like mud pits, reserve pits, storage tanks, sand storage, and other excavated areas, where they are exposed to potential risk of ignition of inflammable vapors, exposure to harmful chemicals, and asphyxiation. Additionally, these kinds of workplaces involve risk of falls, slips and trips too which can cause severe injuries and can even turn fatal. Though the companies are extremely careful and take all safety precautions, but the risk cannot be ruled out.
Additionally, frequent exposure to chemicals used in refineries and drilling operations can impact long-term health. To offset these dangers, oil and gas companies provide comprehensive training to employees to ensure safety protocols and site-specific features.
Working in remote location
The oil and gas professionals have to work on remote location for exploration, offshore duties, pumping stations, gas plants and more. The workers in remote location often feel isolated and they are on their own to cope up with numerous work-related accidents and health hazards.
Working in oil and gas industry is extremely rewarding in terms of career growth, travelling opportunities and compensation. However, the above points must also be considered before stepping into this industry. It is important to mention here that majority of oil and gas companies are aware of the risks associated and thus have sound safety measures in place to avoid any contingency. Moreover, the government and regulatory bodies also impose strict regulations for safety and security of the workforce. Therefore, in many cases, the risk associated is considerably reduced. So, before you accept any offer from any oil and gas companies, you must carefully verify the safety measures and policies of the company. Once, you are assured, your career in oil and gas will be highly rewarding.
If you are looking for relevant opportunities, check out NrgEdge.com to kickstart your career in oil and gas industry.
Due to shortage or limited availability of oil and gas, companies today are evaluating how they can harness alternative energy sources. The alternate fuel market is targeting hydro and thermal power plants, however solar and wind are catching up fast as preferred energy sources. There are still reservations about nuclear energy considering the risk of nuclear waste or manufacturing of nuclear weapons. However, strategies are shaping up to minimize the risk and maximize the profitability potential. Until then, sources such as solar and wind are being focused upon more and new sources like biofuels are explored extensively.
How will the shift towards alternate energy impact traditional oil and gas market?
There have been huge investments in the different alternate energy avenues by most of the big oil majors. These heavy investments on various alternate technologies by big oil majors and other oil companies around the world indicates a positive outlook towards the scope of clean fuel energy. However, the feasibility of its application is still questionable. Whether or not it will be able to meet the energy needs of the world while upholding its profitability is a question that is bothering the world.
Let us understand what the shift means for the companies in the energy sector.
Rate of employment
Among all renewable energy sources that have been studied, bio energy has been most influential. The fuel is created and transported within a confined space. The work is extremely labor-intensive and hence scope of employment increases. Hydropower and wind power will generate job opportunities during construction and project development phase. However, once the unit is commissioned only few operational staff will be required to perform the operational work.
Traditional energy is more expensive than renewable energy. If renewable energy can be produced on large scale, it can eliminate the gas shortage. Even other forms of renewable energy are much cheaper in comparison to traditional oil and gas sector. The cost benefits will be transferred to the consumers and they’ll be able save considerable amount on utility bills.
Improved Brand Image
It makes good business sense to make a move from traditional energy resources to renewable ones. The environmentalists have been arguing about the negative impacts of using and overusing the non-renewable source of energy. The shift towards alternate energy will boost the brand image of the traditional oil and gas company.
Higher market penetration and Mass access to energy
Due to dependence on fossil fuels which are non-renewable sources and expensive, a significant number of people in the world have no access to power. A chunk of people in Asian and Sub-Saharan Africa area are still using traditional biomass for cooking. However, if the alternate energy can completely replace the traditional oil and gas then it will have a deeper penetration into the market and majority of people will have access to it.
Ethical Investment Avenue
Renewable sector is considered as an attractive and ethical investment avenue for the ones who wish to invest outside traditional channels and are futuristic in outlook. The rising investment on alternate energy is impacting the job creation and community cohesion, which is again a positive move.
How the alternate energy is transitioning the oil and gas?
Big oil companies and other oil companies are making practical, well-researched, and steady approach towards renewable energy spanning from solar panels to genetically engineered algae. However, there are still many companies which are in research/experimentation phase and do have a concrete plan in place.
The pathway to clean fuel technology that operates with efficiency and profitability is getting paved. More than 100 countries in developing as well as developed nations have set a clean fuel target and are working towards it. The European Union has set a goal to meet its 20% energy requirements via renewable sources by 2020.
The world has acknowledged climate change and are working together to shift from carbon-intensive to carbon-neutral environment which might pave the way for generations to come.