Doing Business in Mexico

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Doing Business in Mexico

• Mike Martinez
• President of Bay-Inelectra
• President of Constructora Bay de Mexico

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Introduction

• Bay Ltd
• Constructora Bay de Mexico S.A. de C.V. (C-Bay)
• Bay-Inelectra S.A. de C.V.

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Why Mexico?

• Opening new opportunities for private investors
  in the oil gas and petrochemical industries.
  This makes Mexico very attractive for investment
  opportunities
• Stable economy
• Market size and opportunities with Pemex, CFE and
  Private Sector
• New COG areas that will require new technology
• NAFTA facilitates the process between Mexico US
• Geographical closeness to gulf cost, reduces time
  and operational costs
• There exists a business culture that understands
  our way of doing business

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Business Culture in Mexico

• It is not simply a matter of setting up an office
  and start operating like we do in the USA
• You need to take the time to fully understand the
  business culture
• In the case of Pemex, one of the biggest mistakes
  a US company makes is to not understand that they
  are dealing with a State owned company and not a
  private company
• Pemex is a company that belong to the State and
  as such has some very particular requirements
• Is this process complicated? Maybe, but it is
  very doable, in the USA doing business with
  government entities can be complex
• However, there are many opportunities with Pemex
  and the investment in time outweighs the
  resulting business

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How did we do it

• Took the time to understand the Pemex
  requirements and procedures from the proposal
  phase to the project execution phase
• Reduce the uncertainty in many areas by selecting
  the right consultants and specialist in Mexico
• Legal, labor, taxes, real estate, permits,
  marketing
• Hire experienced Mexican specialist to
  facilitate the learning curve
• Select strategic locations for business
  operations
• Select a complementary and experienced partner
  with same vision

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History of Bay In Mexico

• Started working in Mexico for Pemex via a
  sub-contract in 2000. Experience was good and we
  explored ways to expand our presence in Mexico
• In 2001 Bay formed a Mexican Subsidiary C-Bay in
  order to pursue opportunities directly with Pemex
• C-Bay succeded in winning a 40M USD contract for
  Pemex Ixtal-A in 2003. Project was executed
  between Corpus Chirsti, Tx and Mexico.
• We learned how to interface and execute projects
  to Pemex expectations
• Successful execution lead to more interest in
  Mexican market

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History Contd

• Our success with Pemex and future project
  opportunities resulted in an increased interest
  in Mexico
• To be more competitive we decided that a local
  presence was needed
• We explored several options for a global and
  experienced partner
• We decided to partner with Inelectra an
  experienced Engineering, Procurement and
  Construction (EPC) company
• Inelectra has complementary experience to Bay
• We then explored several options for facilities
• Opened executive offices in Mexico City
• Regional offices in Tampico, Mexico
• Developed a yard contract in Pueblo Viejo,
  Veracruz
• Quoted several projects for Pemex and were
  awarded two Living Quarters Platforms HA-H and
  ZAAP-C valued at 150M USD

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Yard Facilities in Mexico

• Inaugurated Oct 2005
• Over 15 hectares (37 acres)
• Capacity to execute major projects for Pemex and
  others
• Shops, machinery and personnel (over 450
  employees)
• Location Pueblo Viejo, Veracruz
• On the Panaco River, access to the Gulf of Mexico
• Corpus Christi, 420 miles, Carmen 570 miles
• Borders with Tampico, Tamaulipas
• Tamaulipas borders with Nuevo Laredo, Reynosa and
  Matamoros

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Summary

• We are convinced that Mexico represents a stable
  and growing market in the years to come
• Our plans are long term and the investment in the
  fabrication yard is proof of this commitment
• Thank Pemex for the opportunity to continue to
  participate in this very exciting market
• Thank our alliance partners that helped us
  establish ourselves in Mexico in record time
• Thank the Commerce Department for the support
  they have given us on all aspects of establishing
  ourselves in Mexico

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• Thank You
• Mike Martínez
• Bay-Inelectra S.A. de C.V.
• Bosque de Duraznos 127, Piso 8
• Bosque del las Lomas, Mexico DF, C.P 11700
• Office 52-55-5010-2300
• Email martinezm_at_bayltd.com