Pacific Headway in Liberalizing Mexico Offshore Oil & Gas Market

Pacific Radiance Ltd. (Pacific Radiance or the Group), a provider of integrated offshore marine support services, is making further headway in the fast liberalising Mexican offshore oil & gas (O&G) market.

In its latest move, the Group will transfer its key operations and assets in Mexico to Navigatis Radiance Pte. Ltd. (Navigatis Radiance), its 51%-owned indirect joint venture (JV) with Navigatis S. De. R.L. De C.V (Navigatis). Navigatis is a special purpose entity set up by Mexican private equity firm Axis Capital Management which manages US$1.5 billion of assets. Navigatis will in turn invest up to US$40 million, adding to the standing of the JV which was formed only on 27 September 2016.

When the transfer is completed, Navigatis Radiance will own approximately 40% effective interest in CR Offshore S.A.P.I. de C.V, a ship management company, 99% in vessel leasing company CEIBA Maritima S.A.P.I de C.V, SOFOM ENR, as well as two anchor handling tug supply (AHTS) vessels and a maintenance work boat (MWB). All three vessels are currently employed in the Gulf of Mexico. The Group also plans to merge its back-end operations in Mexico which will improve the cost efficiency of the JV.

Mr Pang Yoke Min, the Executive Chairman of Pacific Radiance, said: “Navigatis Radiance, with its enlarged operations and balance sheet as well as a modern and efficient fleet of support vessels, will sharpen our overall competitive edge in the Gulf of Mexico.

Also, our collaboration with Navigatis and indirectly with Axis and its partners, underscores the confidence they have in Pacific Radiance's operational experience and relevant fleet to secure opportunities in the region.”

Just last month, the Group secured a long term contract worth US$73 million including options for its MWB which was delivered in 1HFY16. The work boat is currently performing platform maintenance, diving and subsea maintenance, as well as offshore construction work in the Gulf of Mexico.

Commenting on the prospects of Mexico's offshore sector, Mr Pang added: “We are positive on the long term prospects which are being driven by government efforts to quickly liberalise Mexico's energy market. Our JV is expected to grow with the pick up in E&P activity in the Gulf of Mexico now that foreign companies are allowed greater participation to develop the country's large and potentially accessible hydrocarbon resources.”

The Mexican government's energy reforms to boost the country's dwindling O&G output have picked up pace since it opened up the country's hydrocarbon market in December 2013.

These reforms allow the private sector, including the large independent oil companies, to enter into profit sharing, production sharing and even hydrocarbon licensing agreements with Petroleos Mexicanos or Pemex, the country's state-owned energy company.

In July 2015, the Mexican government awarded two production-sharing contracts for shallow-water fields in the Gulf of Mexico to locally incorporated companies. This was followed by strong bids from independent oil majors as well as China National Offshore Oil Corporation, China's national oil company, for 10 deepwater blocks, of which eight were awarded on 5 December 2016.