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PEMEX Explosion

PEMEX Explosion

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On April 1, a processing platform owned and operated by the Mexican state-run oil company PEMEX in the Gulf of Mexico near the coast of Campeche, exploded killing four workers and injuring 45. One week later, some of the injured workers are still in intensive care. Others dived into the water to escape the fire and three are still missing as of April 10.

The explosion occurred at 03:40 am local time on the platform known as Abkatun-Permanente. Abkatun-A-Permanente is connected to six other platforms, which are, in turn connected to 20 oil and gas pipelines that transport hydrocarbons to export centers and refineries.

According to official reports, the emergency protocol was put in place immediately, which helped three hundred workers escape in time with the help of ten vessels and 28 helicopters. The fire broke out in the dehydration and pumping area of the Abkatun A-Permanent platform, according to PEMEX. The company issued a statement stressing that no major oil spill occurred at the plant.

PEMEX CEO Emilio Lozoya affirmed that the impact on production would be minimal and that nearby facilities could pick up the slack. Nevertheless, in the days following the explosion, Pemex?s daily production output fell by 220 thousand barrels a day.

Located 53 miles off the coast, the Campeche Sound contains the two biggest shallow-water oil deposits in Mexico, with some 200 platforms extracting 78 percent of the country?s crude oil. Mexico is currently ranked number 10 among the world?s crude oil producers.

PEMEX?S Grim Record

Pemex has a grim record when it comes to accidents. In the last eight years, it has had 25 explosions in their production and processing facilities. Between 2007 and 2015, 32 people have died and 62 were injured. Unrelated to oil extraction activities, in 2013, Pemex Tower in Mexico City suffered a fire-less gas explosion, which killed 37 employees and over a hundred injured.

According to news reports, in 2013, accidents resulted in a loss of 32 workdays, measured in person-hours, the same as in 2012.

Impact on Energy Reform

The Mexican Government treated this explosion as a major event. Their main concern was minimizing the reputational risks of Pemex at a time in which major oil companies are weighing the pros and cons of participating in O&G bid rounds, the outcome of President Pe?a Nieto?s major energy reform.

Comments to the press were brief and discrete and focused mostly on presenting good news, such as the medical release of some injured workers, the search of the missing ones, the operations going on again in the platform, the security to reach 80% of the original estimated production, etc.

The first of twelve bid rounds, as part of the energy reform, will begin in July. The first phase of Round One auctions includes 14 shallow-water exploration blocks off the coasts of the southeastern states of Veracruz, Tabasco and Campeche (where the explosion occurred).

In the last two years, many foreign companies approached Pemex to forge partnerships in order to get to know the company and the Mexican government better in the hopes of positioning themselves as a viable and desirable bidder. This latest example of Pemex?s security risk, begs the question of reputational risk of a partnership between Pemex and an IOC, especially if Pemex is the operating partner.

Only three working days after the explosion, Pemex announced a one million dollars investment by US-based multinational investment firm First Reserve Corp for infrastructure and maritime transportation infrastructure. The announcement was part of a wider capitalization effort to help Pemex modernize and compete with the newcomers.

Media statements

PEMEX-General Director? Gustavo Hernández

?The platform will continue its normal activities (except the damaged part) to reach at least 80% of the original target production.?

PEMEX-General Director? Gustavo Hernández

?The missing workers will be searched until found.?

President Enrique Pe?a Nieto

?There would be a thorough investigation into what caused the fire.?

Key Takeaways:

  • The risks of associating with Pemex, especially, but not limited to, as an operating partner, could outweigh the potential benefits of working closely with the National Oil Company.
  • Pemex and the Mexican government prioritized communicating news of investments in detriment of a laser-focus on victims of the accident.

  • Analysis of the News and Press Statements

    Pemex?s press releases were focused on spreading positive developments rather than attempting to offer up-to-date, accurate information about the victims. Even though Pemex has declared, the security protocol triggered immediately which helped to evacuate more than 300 workers off the platform, witnesses described a situation of panic and distress which led dozens of men to dive into the sea, causing a series of missing people, 3 of them are still being searched for by the Mexican navy.

    President Enrique Pe?a Nieto has declared that investigations will continue to find the cause of the explosion. His statement was timely, immediately after the news broke about the accident.

    In the first few days after the accident, the families of workers complained that Pemex and the Pemex health system was dedicated at first to giving explanations about operational procedures in response to the accident rather than information about the victims or communicating with relatives.

    Key Takeaways:

  • Best practices crisis communications point to attention and communication with the family of the victims as the priority.

  • Social Media

    Pemex has been thoroughly active both through Twitter and media statements declaring that the platform situation is stable enough to continue its normal activities to reach at least 80% of the original target production, they have also reported on the situation of the injured workers.

    Sentiment analysis of Twitter chatter (April 1 ? 10)

    Picture - VP

    Conclusion

    The timing of the fire and statements on the part of Pemex shows how much the NOC and the Mexican government are working towards modernization to enter a highly competitive international oil market. Nevertheless, as compared to the many other issues that have bogged down the current administration?s reputation, the fire, which occurred during Holy week holiday, did not generate significant outrage in the population.


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