Campeche lives with uncertainty due to low oil prices

CIUDAD DEL CARMEN, Campeche — In Ciudad del Carmen, there is liquidation.  “For sale”, “For rent,” say the signs in this city on the Gulf of Mexico. The drop in oil prices has hit the heart of the offshore industry in the state of Campeche, writes Denis Düttmann of Deutsche Presse Agentur.

The boom is history, and now sadness reigns under the hot Caribbean sun. “In good times we had 32 employees, now there are only 12. We had to lay off the rest,” says the entrepreneur Mario Solache Rosiñol.

His company Hydra Marine has two ships to transport personnel and equipment to offshore extraction. Before the ships set sail three times a week, currently only one. “How much longer will we have this agreement, who knows. Our customers have us in uncertainty.”

From 2011 to 2013 Mexican crude oil had an average annual price of $100 USD per barrel (159 liters). Now the price is just over $30 USD.

In the fat years oil brought prosperity to this former fishing village, but now hotels, restaurants and shopping malls are empty.

“Almost always we had full quota. Managers, engineers and oil workers from all over Mexico but also from the US, Colombia and Venezuela were staying here,” says Manuel, who works at the bar of a large hotel. “Now almost all the rooms are empty”.

Pablo Lopez, a member of the National Union of Technical and Petroleum Professionals (UNTYPP), says, “The worst is yet to come. Soon this can become a ghost town,” he predicts.

Mexico’s oil industry is dominated by state-owned Petroleos Mexicanos (Pemex). While in recent years Mexico opened its energy market to private capital, before the industry was very tightly controlled. Low oil prices, however, do not help to attract foreign investors.

Pemex cut its budget this year and froze a series of projects. In utilities and services, tens of thousands of people lost their jobs.

In the states of Campeche, Tabasco and Veracruz, 40 thousand jobs were cut in the span of a year, according to figures collected by the newspaper El Financiero. Campeche’s economy shrank 6.5 percent.

“Pemex takes 90 to 180 days to pay,” says Solache. “For a small company like ours that can sink it”. The management welcomes the liberalized energy market, but so far has not seen any fruit. “To us it helps for us not depend on a single customer.”

Hermilo Sanchez Valladares, commercial coordinator Marinsa company, notes a deterioration in the service industry. His company is dedicated to the rental of specialized vessels for the offshore industry. “But there are few contracts and increasing vessels. That puts pressure on prices,” said Valladares.

With 800 employees Marinsa is a relatively large company. It has offices in Houston, Bogota and Singapore, in addition to Mexico. “Now we try to get contracts in other countries. Let us go to work,” said Valladares.

The company is committed now to make countercyclical investments. It is enlarging its corporate building in Ciudad del Carmen and hiring well-prepared people from other companies. “We expect the market to recover,” said Valladares.

Hailing from Ciudad del Carmen, he said, it hurts what is happening. “Local businesses suffer. Many people leave, and those who remain have no money,” he laments. “I recently flew from here to Houston. There were two passengers on the flight. Before you had to book tickets in advance.”

In the port of Ciudad del Carmen much activity is still seen. “Although businesses go under, ships still have to be maintained,” says the manager of the port, Enrique Novedo Gonzalez.

Per month the port has a thousand vessel entries. “But long-term low oil prices are also dangerous for us. When businesses fail and the whole industry is shrinking, it affects us,”says Novedo.

In a large car dealership on the main street of Ciudad del Carmen, sleek SUVs glisten in the sun. “Before I sold five or six of those a week,” says one employee. “Now people come to return their vehicles because they cannot afford the payments.”

Source: sinembargo.mx via Deutsche Presse Agentur