Navantia shipyard CEO Jose Manuel Revuelta said work was underway on a floating hotel, or flotel, for state-owned oil giant Petroleos Mexicanos, or Pemex, and the shipbuilding company was incorporating a management system designed to improve efficiency.

Revuelta met on Tuesday with the team responsible for building the flotel, which will be used to house workers from Pemex's offshore rigs.

Pemex awarded contracts to construct two flotels to Navantia and another Spanish shipyard, Hijos de J. Barreras, in January.

The flotel project will use lean manufacturing, a system that "seeks to cut costs and time" in producing a vessel, Revuelta said in a statement.

The shipyards are both located in the northwestern Spanish region of Galicia, with the state-owned Navantia in El Ferrol and Barreras in Vigo.

Pemex officially took control of Hijos de J. Barreras on Dec. 16, with the Mexican oil giant purchasing a 51 percent stake in the Spanish shipyard for 5.1 million euros ($7.01 million).

The flotel contracts call for the vessels to be completed in 29 months.

Hijos de J. Barreras and Navantia bid for the flotel contracts as part of a consortium that includes PMI Norteamerica, a unit of Pemex subsidiary PMI Comercio Internacional.

The winning bid was $407 million for the two contracts, which cover construction of the two flotels and support services.

Initial estimates had put the cost of each ship at about $190 million.

The flotels must be delivered to Pemex by July 13, 2016.

About two-thirds of the 2.5 million barrels per day (bpd) of crude, on average, produced by Pemex comes from offshore oil fields. EFE