A winning Mexican-Norwegian recipe
To ensure growth and future development, companies must always consider venturing abroad in search of new opportunities. However, expanding successfullyoutside of the home market can be equally challenging as it is rewarding; in some cases, the company takes a strategic approach in its search for a promising project, but in other cases, the discovery of a new market may happen by chance. The Norwegian oil and gas sector has built a strong offshore sector and, as the market matures, it will become increasingly necessary to find opportunities in foreign markets, especially since oil and gas plays a crucial role in Norway’s economy. “I believe that Norwegian companies would benefit greatly to move to new markets by planning, rather than opportunistically by chance,” says K. Fritzvold.
Ketil Fritzvold, the CEO at KC Offshore, was working as a consultant for Bergesen in 2005, one of the oldest shipping families in Norway, when he identified the tremendous opportunities Mexico represents for the Norwegian Offshore business. The offshore industry can tap into a fantastic Mexican market set for growth for generations to come. The main motivation to create KC Offshore was the considerable potential of the Mexican offshore sector for Norwegian services, products and solutions.
After his experience in Mexico with Bergesen, he established KC Offshore, a Mexican Norwegian-Brazilian partnership for the offshore oil and gas sector in Latin America. The company started out as a consulting business supporting large international companies with their business in the Americas. KC Offshore is currently growing its own business as an offshore services and operation support business in Mexico. “We seek to capitalize on our ability to provide our customers with quality fit for purpose solutions in a transparent fashion bringing together the best from both countries,” says K. Fritzvold. “Solely the difference in size between Norway, with a population of 5 million and Mexico, with more than 120 million inhabitants, tells you something about the market potential,”adds K. Fritzvold.
The CEO at KC Offshore has had a great experience working in Mexico. “It is fantastic. It is extremely rewarding to work in an environment with extremely dedicated, smart, and highly-knowledgeable people that are giving everything they got to see their country flourish, everywhere I go I meet people with a very high level of integrity in their work. I think Mexican people work twice as much as Norwegians,” he continues.
Nevertheless, it is normal to encounter challenges when working in a foreign country due to the differences between cultures and communication and the way society and business is organized. “As a Norwegian, I am probably very direct in my form of communication, and, I think that, in Mexico, there is a need for a more analytical approach to what is being said,” comments K. Fritzvold.
KC Offshore has kept a completely open communication and benefitted from this approach, but each company must find its way depending what they do and where. “When going abroad it is probably not the product, the service or the solution offered that represent the biggest challenge, but the ability to understand how to do business in a foreign country; that will be the difference between failure and success,” says K. Fritzvold. “If you are a Norwegian company, operating in Norway with Norwegian clients what you do and how may be seem straight forward to you, however, the same is seen through the eyes of a foreigner may seem extremely strange,” states K. Fritzvold. Furthermore, he believes it is all about empowering people. In his opinion, if a company is able to do so, things are done extremely quickly and with the highest degree of professionalism.
According to K. Fritzvold, Norwegian companies are proficient at leveraging competitive advantages when going abroad, but they face the challenge of raising awareness about the possibilities and solutions offered by Norway. “The main advantage for Norwegian companies is that, before we present ourselves, we already think and work on what could be done, and how it should be done in the fastest, best, and most correct way,” he says. “The disadvantage is that we do not present ourselves and take the time to build solid relations, therefore, people do not know us,” he continues. In order to engage in new markets, it is crucial for Norwegian companies to build its presence and reputation through their operations and human resources.
Over many decades, Mexico and Norway have developed an oil and gas supply sector that holds considerable knowledge, competence, and innovation. It has built a strong reputation in oil and gas technology development and the sector has strong opportunities abroad. “In addition, Mexico is also probably one of the best hosts you can find in the world when it comes to valuing a customer. For instance, Mexico has one of the best tourism industries in the world and people are very thoughtful. People pay a lot of attention to their clients. Of the places I have travelled I have only seen that type of human relations in Mexico,” says K. Fritzvold. “It is amazing how they make you feel welcome, value your presence in Mexico. If you can match that with the quality delivery, I think you have a winning recipe,” adds K. Fritzvold.
Due to the Energy Reform of 2014, the Mexican oil and gas sector finally opened up for foreign investments and activities. It is expected that the new investments will boost activities in the Mexican oil and gas sector increasing the current production of roughly 2 million barrels o.e. per day to 3.5 million. As of now, Pemex, the National Oil Company, is in charge of the entire oil and gas production in Mexico. More than 20 companies with offshore activities had entered the Mexican market by the beginning of 2018, and only four years have passed since the dismantling of the State’s monopoly. Mostly all of the major oil companies have representation in Mexico and companies such as BP ExxonMobil, BHP, Total and Statoil, have been assigned with acreage and have committed to explore those areas.
KC Offshore offers a wide range of services in vessel operations, construction, installation, logistics, maintenance and support services and expects to capitalize on the opportunities offered by the Mexican market. The growth motivated by the Energy Reform will create a higher demand for local services, technologies, and know-how. “We want to bring the best practices of oil production activities in the North Sea, which is one of the most difficult and challenging environments in the world , and continue to build a Mexican service industry around the principles of safe, clean, and efficient operations,” says K. Fritzvold. KC Offshore believes that these principles are crucial to be recognized by the international players. “If the major players cannot find companies that operate with these guidelines, they will bring foreign service providers to do the work for them,” says K. Fritzvold. Providing high-quality Mexican-Norwegian services in a growing market may open substantial windows of opportunity for many successes and a solid bottom line in the years to come.
In addition, KC Offshore cooperates closely with Fram Drilling, a Norwegian drilling company established in 2016 that also focuses on the Mexican market, under a joint umbrella. “In the drilling segment we are targeting mid and deep-water opportunities, as well as platform drilling,” says K. Fritzvold. “We clearly see the advantages of the cooperation between KC Offshore and Fram Drilling; the drilling operations will create business for the oil services company,” he continues. KC Offshore provides the needed logistics and oil services and aims to fulfill the needs of other players in the market, taking advantage of the economies of scale to keep costs as low as possible.
Furthermore, the company has positive expectations for the coming years. “I believe that the oil and gas industry is starting to stabilize after the down-cycle and that our activities will increase in 2018,” says K. Fritzvold. The company’s goal is to take the systems, formats, processes, transparency, and technology from Norway, and combine with the service quality and attitude, the engineering creativity business savviness and rigorous follow-up attitude from Mexico and build everything in Mexico with Mexicans. “We want to implement this recipe using Mexican-Norwegian elements. I believe that this would be a very desirable product also in the international market,” concludes K. Fritzvold. KC Offshore is ambitious to grasp the growth potential and manage the opportunities to grow considerably within 5-10 years.