Capital Projects in PEMEX

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Capital Projects in PEMEX
PEMEX Procurement Seminar
March, 2006
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Contents

• Introduction

• Investments

• Organization Chart

• Current Projects

• Up coming Projects

• Execution Strategies

• Conclusions

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Introduction
Petróleos Mexicanos is positioned among the 10
most important companies of the world in the oil
and gas industry. 2005 Pemex incomes were over
86 billion dollars. 2005 Projects investment was
close to 12 billion dollars.
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Main figures for crude oil and natural gas
KTY Thousand tonnes per year.
Fuente Las reservas de hidrocarburos de México,
Evaluación al 1 de enero de 2006
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Crude oil and natural gas reserves
Equivalent crude oil million barrels
46,914
13,428
15,836
17,650
Total 3P
Possible
Probable
Proven
Fuente Las reservas de hidrocarburos de México,
Evaluación al 1 de enero de 2005
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PEMEX Worldwide
Refining Capacity
Reserves
Production
Companies
Country
Gas
Gas
Crude oil
Crude oil
1 Saudi Aramco Saudi Arabia 1 4 1 7 9 2 ExxonMobi
l USA 13 13 5 2 1 3 PDVSA Venezuela 5 5 4 11 3 4 N
IOC Iran 2 2 2 5 14 5 BP England 18 15 6 4 5 6 RD
Shell Holland and England 25 17 8 3 2 7 Total Fran
ce 22 21 15 9 6 8 Chevron USA 19 24 11 12 10 9 PEM
EX México 10 29 3 14 13 10 Petrochina China 14 16
9 19 12

• The classification is based on six parameters of
  oil gas companies
• Oil reserves
• Oil production
• Gas reserves
• Gas production
• Refining capacity
• Total sales

Source Petroleum Intelligence Weekly, December
2005
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Capital investment, 1995 - 2006
Billion dollars
10 Billion dollars per year
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Capital investment 2006
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PEMEX Organization Chart
Pemex Administration Council
CEO
Comptroller
Engineering and Project Execution
Operations
Finance
Administration
Operations
Exploration and Production
Refining
Gas Processing
Petrochemicals
International Trading
Mexican Petroleum Institute
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Main Current Projects

• PEMEX Refinación
• Minatitlan Refinery Expansion.
• 6 EPC contracts.
• Cost estimate 2.4 bdd
• Participation of domestic and foreign companies
• PEMEX Gas y Petroquímica Básica
• Construction of 2 cryogenic separation units
• EPC contract
• Cost estimate 362 mmdd
• Process capacity 200 MMcfd each

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Main Current Projects

• PEMEX Petroquímica
• Ethylene unit in Morelos, Ver.
• EPC contract
• Cost estimate 276 mmdd
• Expansion of capacity and modernization
• PEMEX Exploración y Producción
• Construction of 47 platforms and 840 km of
  pipeline
• EPC contract
• Cost estimate 3.8 bdd
• Participation of over 12 domestic and foreign
  companies

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Capital Projects
Millions of dollars
Estimated Total Cost
Project Description
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Project Execution Phases
Execution
Contracting, complementary engineering,
procurement, construction, start up and
performance tests
Operation and Expost Evaluation
OpportunityFEL 1
Conception FEL 2
Definition FEL 3

• Execution process
• Projects are defined through successive phases.
• Each phase has to be approved before committing
  additional resources.
• Non return point is reached after FEL 3.
• Basic engineering extended FEED are contracted
  before EPC.
• Cost estimate accuracy -10 , 15.
• ROI and sensibility analysis meet business
  requirements.

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Execution Strategy

• New approach for project execution will result in
  the following benefits for PEMEX
• Achieve a better definition of projects before
  bidding the EPC contracts
• Obtain a more accurate cost estimate
• Possibility to contract by lump sum or by unit
  prices
• Decrease contractors risk
• Minimize deviations in project cost and schedule
• Avoid changes during project execution
• Contracting Strategy
• Engineering services for basic engineering
  extended FEED will be contracted before EPC
  contract
• EPC contract scope will include complementary
  detailed engineering, materials and equipment
  procurement, construction, commissioning and
  start up. This contracts will be lump sum or
  unit price according to the type of project
• Improvement of Bidding Documents
• Include Quality and Experience requirements
• Simplify and uniform contract clauses
• Have contractors to participate during the
  elaboration of bidding documents (1)
• Promote joint ventures for engineering services
  between Mexican and foreign companies

(1) Note Blank contract prototypes will be
provided at the end of this presentation.
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Structure of the Mexican legal framework
General guidelines to participate as an
engineering or EPC contractor for PEMEX

• Political Constitution of Mexico

• Regulatory Law of the Constitution Article 27 on
  oil matters
• NAFTA Treaty
• Petróleos Mexicanos and Subsidiaries Organic Law

• Public Works Law
• Public Acquisitions Law
• Petróleos Mexicanos
• internal policies regulations

Source Legal Counsel of PEMEX Exploración y
Producción
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General guidelines to participate as an
engineering or EPC contractor for PEMEX

• Services are awarded by Public Bidding to
  guarantee free participation under Public Works
  Law
• Bids may be
• Domestic
• International
• Bids communication mechanisms are
• Official Gazette
• (Diario Oficial de la Federación)
• Electronic Government Procurement System
  (COMPRANET) www.compranet.gob.mx

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Conclusions
We expect that the information we have shared
with you about PEMEX projects will stimulate the
participation of foreign companies and promote
joint ventures with Mexican companies.

• Ing. Ernesto Ríos Subdirector de
  Ingeniería, DCIDP
• 
  eriosm_at_dcidp.pemex.com
• Ing. José Ochoa Gerente de
  Ingeniería, SIDOE
• 
  jochoaz_at_pep.pemex.com
• Ing. Rafael Corral Gerente de
  Normatividad Técnica, DCIDP
• 
  rcorral_at_dcidp.pemex.com