On Jan. 21, 2018, at 1 a.m. Mexico local time, Yao guangwen, the General Manager of Liaoning Wolf Petroleum Equipment Co., of GNG Group, and Yubin, the project manager, arrived at Mexico City, and began their pioneering trip to Mexican market. Before leaving, we had a careful study to the customers and their national circumstances. The main information is as follows:
Petroleos Mexicanos (PEMEX) was established in 1938, as an integrated national holding company established by the Mexican government and the largest oil and chemical engineering company in Mexico. PEMEX is the third largest crude oil production enterprise all over the world, and is also the eighth largest oil and gas company with nearly 135,800 employees.
Mexico was once known as “a country floating on the sea”. As early as 1869, Mexico had drilled the first oil well. In 1921, Mexico's oil output reached to 193 million barrels, which was only after the United States and was ranked the second in the world. PEMEX’s main business include: oil exploration and development; oil refining (7 refineries in Mexico with an annual capacity of about 75 million tons) and oil product sales; petrochemicals; supply and sales of liquefied petroleum gas, natural gas and basic petrochemicals. According to the company’s survey results in 1996, it had a total oil reserve of 6.665 billion tons and natural gas reserve of 1.916 trillion cubic meters.
The three most influential sectors of the energy industry in Mexico are Ministry of Energy, Ministry of Economy and Ministry of Justice. Because the energy industry is the backbone of the Mexican economy, the secretary of Ministry of Energy is usually the second most popular choice for President.
Mexico carries out the Agency System in the oil industry, which is similar to the Middle East, that is, the sate oil company PEMEX can only does business with local companies, and it can not sign contracts with foreign companies directly. If foreign companies want to do business with PEMEX, they can only do this through the local agent or agents.
In the course of discussion, we played our group’s advertising video for Martin, our Man-in-Middle. After watching, Martin said, “The technical content of GNG Group is far better than other 4 enterprises”.
The participants from GNG and PEMEX had a warm meeting for 2 hours in the meeting room. We also introduced the history and current situation of GNG group and played the adverting video during the meeting.
The representatives of PEMEX introduced the three ways to do business in Mexico in the oil industry, they are:
1. to be a product or service supplier for PEMEX;
2. invest in PEMEX’s certain oil-block, to become PEMEX’s partner;
3. Purchase oil or gas blocks from the federal government of Mexico directly.
All three forms of cooperation are completed under the premise of agency. PEMEX will only rent equipment and purchase services, rather than purchase equipment directly, because of the concerns about the maintenance of the equipment in the later period. In the evening, we had a further discussion with the representatives of PEMEX in the conference room at the hotel; we discussed some questions about the equipment rental, including payment and equipment leases and the cooperation opportunities in oil refining. Through the conversation, we knew that due to the limitation of refining capacity, Mexico had a shortage of 50% in the domestic refined oil supply; Mexico welcomed foreign investors came into the refining industry to help them make up the shortfall.
GNG Group met with Mr. Andries, general director of Ministry of Justice, in the tower of Mexican Ministry of Justice in 23rd. we introduced that we were interested in selling and renting products and service, oilfield engineering technique service and industry park, etc. in Mexican market. Mr. Andries expressed that “ Mexico is in deep reforming situation, the policies for investors abroad and international cooperation are more and more open, the government welcomes all the investors abroad to invest in Mexico to drive the development of Mexican manufacturing industry. For the foreign investors, especially the investors investing in manufacturing industry, Ministry of Justice will make corresponding preferential policies.” He also expressed that he would like to be friends with GNG Group and strive us for the best policies, if GNG Group was able to invest industry park, he would utilize the private relationship with each governor of state to get the preferential or free land for us.
GNG Group met with the secretary of Ministry of Energy in the tower of headquarter of Ministry of Energy in 25th. The secretary expressed the welcome for GNG to enter into Mexican market, Petroleum Department would take all methods to bring substantial enterprises to Mexico to balance the supply-demand relationship in Mexican market, he also specially introduced that there were 4000 shale gas wells of drilling and fracturing plan. There was only 4% of success rate for appointing to meet the secretary of Ministry of Energy, he gave us nearly two hours, it was enough to show the recognition for GNG Group.
This visit sufficiently shows the products, service and the comprehend power of GNG; negotiating business directly with Ministry of Energy, Ministry of Justice and PEMEX gets a high starting point for GNG to develop the business in Mexico in the future.
