pemexpresentationrev isedpart2

Capital Projects in PEMEX: 

March, 2006 PEMEX Procurement Seminar Capital Projects in PEMEX

Contents: 

Introduction Contents Investments Organization Chart Execution Strategies Current Projects Up coming Projects Conclusions

Introduction: 

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.

Main figures for crude oil and natural gas: 

Fuente: Las reservas de hidrocarburos de México, Evaluación al 1 de enero de 2006 Main figures for crude oil and natural gas KTY: Thousand tonnes per year.

Crude oil and natural gas reserves: 

Equivalent crude oil million barrels 46,914 15,836 13,428 17,650 Total 3P Possible Probable Proven Fuente: Las reservas de hidrocarburos de México, Evaluación al 1 de enero de 2005 Crude oil and natural gas reserves

PEMEX Worldwide: 

PEMEX Worldwide 1 Saudi Aramco Saudi Arabia 1 4 1 7 9 2 ExxonMobil USA 13 13 5 2 1 3 PDVSA Venezuela 5 5 4 11 3 4 NIOC 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 France 22 21 15 9 6 8 Chevron USA 19 24 11 12 10 9 PEMEX México 10 29 3 14 13 10 Petrochina China 14 16 9 19 12 Companies Country Gas Gas Refining Capacity Crude oil Reserves Production Source: Petroleum Intelligence Weekly, December 2005 The classification is based on six parameters of oil & gas companies : Oil reserves Oil production Gas reserves Gas production Refining capacity Total sales Crude oil

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Capital investment, 1995 - 2006 Billion dollars 10 Billion dollars per year

Capital investment 2006: 

Capital investment 2006

PEMEX Organization Chart: 

Engineering and Project Execution International Trading Mexican Petroleum Institute Operations Finance Administration Operations Exploration and Production Refining Gas Processing Petrochemicals Pemex Administration Council Comptroller PEMEX Organization Chart CEO

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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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Project Description Estimated Total Cost Millions of dollars Capital Projects

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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. Project Execution Phases Contracting, complementary engineering, procurement, construction, start up and performance tests Execution Opportunity FEL 1 Conception FEL 2 Definition FEL 3 Operation and Expost Evaluation

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Execution Strategy (1) Note: Blank contract prototypes will be provided at the end of this presentation. 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 contractor’s 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

Structure of the Mexican legal framework: 

Structure of the Mexican legal framework Political Constitution of Mexico Source: Legal Counsel of PEMEX Exploración y Producción 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 General guidelines to participate as an engineering or EPC contractor for PEMEX

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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 General guidelines to participate as an engineering or EPC contractor for PEMEX

Conclusions: 

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@dcidp.pemex.com Ing. José Ochoa Gerente de Ingeniería, SIDOE jochoaz@pep.pemex.com Ing. Rafael Corral Gerente de Normatividad Técnica, DCIDP rcorral@dcidp.pemex.com