Human

The importance of Data Rooms

 By Chris Dalby

As more and more governments host tenders for oil resources, the data rooms have become the custodians of all the knowledge companies need to decide whether to bid. The data rooms are where governments provide all the information they have on oil sites, including type of asset, type of oil, estimated and proven reserves, geology and everything else companies need to know. Chris Dalby looks at what should be in the ideal data room, what those putting oil fields up for tender and potential bidders expect to find, and how improvements are being made by harnessing the latest technologies…

In a relatively trendy government building on Patriotism Avenue in Mexico City lie the offices of the country’s National Hydrocarbons Commission (CNH). In charge of Mexico’s energy reform that will open the oil and gas sector to private and foreign capital for the first time, the CNH has been the point of contact for any multinationals looking to do business.

Mexico’s reserves have been well-documented for years, but private companies need a way to verify this information for themselves. This is where Data Rooms come in. Nestled inside the CNH building, these physical data rooms present a staggering range of information, in multiple language, ranging from the proven, probable and possible reserves in each field, a breakdown of each block being put up for tender, types of oil, the geology and every single operation made across all fields.

But, with the privatization of oil regimes having been a growing trend for decades, data rooms are more than mere storehouses. Their construction, their ease of use, their interfaces, their navigability all count toward success.

Mexico presents just the latest example of how a data room can influence a tendering process. In January 2015, Round 1 of the Energy Reform put 14 shallow water exploration areas in the Gulf of Mexico up for tender. Based on this, 16 companies applied for access to the data rooms. Of these, 7 moved forward to the actual tender phase, including heavyweights such as ExxonMobil, Chevron, Ecopetrol, Shell and BG Group.

Furthermore, the data room was rolled out for shallow water tenders, which were never the jewel in Mexico’s hydrocarbon crown. Therefore, companies were even keener to gain access during later rounds, containing the more valuable and resourceful deepwater blocks. Oscar Roldan, head of Mexico’s National Hydrocarbons Information Center, gave an idea of the project’s complexity. “For deepwater, we have 20 seismic surveys…as well as the data from 55 wells. For shallow waters, we have 15 seismic 3D surveys, four packs with information on 165 wells, and one pack with 23 seismic 2D surveys. In terms of…bidding rounds, we have delivered 143 data packs for the first four tenders of Round One and hosted 312 visits to the Data Room.”

For its Data Rooms, the Mexican government held a bidding round to design it, with the winning bid coming from Schlumberger, the largest oilfield services company in the world. The Oil and Gas Year described the relationship as a close one, saying that “more than 60 years of operations in Mexico alone are testament to Schlumberger’s close working relationship with Pemex. In addition to the company’s hands-on involvement in nearly every hydrocarbons-producing basin in Mexico, it is responsible for compiling Mexico’s National Data Repository and setting up the data rooms for the Round One tender. The contract, issued by the National Hydrocarbons Agency in October 2014, allotted the company a brief three months to complete the task by the time the first bidding round was launched in December 2014.”

This short period appears to have been enough, as Schlumberger’s President for Mexico and Central America, Arindam Bhattacharya, said that “the first Data Room was opened in a record time of three months, within the timeframe established by the Energy Reform.”

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According to Bhattacharya, delivering the data room was one of the most important projects in Schlumberger’s portfolio, creating an appropriate sense of how any delays or errors could threaten Mexico’s Energy Reform.

However, not all governments or companies have the resources to hire Schlumberger. To counter this, an entire industry has risen up to provide governments and companies with bespoke data rooms, tailored to the needs of all involved. In order to satisfy such smaller demands, the construction of data rooms must still take into account a number of problems. Issues such as privacy, software bugs or incomplete data have the potential of derailing investment. Companies such as the one simply named Data Room offer virtual data rooms, which can have a scope ranging from tracking oil and gas assets internationally to providing all the specs needed to close a merger or acquisition.

Technological advances have made data rooms far more wide-ranging and the surrounding expectations far higher. A company needs to be able to trust all the information has been included and that any piece of data needs to be accessed and processed at will. Mexico appears to have succeeded. Any other countries looking to open up their oil sectors will have to follow suit.

about the author
Chris Dalby
Journalist. Editor. China, Mexico, Latin America, Asia, place branding, Olympics, oil and gas, mining, renewable energy, international politics.