Reforms Lead to Stronger Natural Gas Participation

Q: How can Promotora Energética support the development of the automotive market?

A: Our core business is to develop compressed natural gas projects for automotive and industrial applications. Clean Energy Compression is a leading manufacturer of these solutions. The company has developed an innovative oilfree design that makes gas cleaner, preventing oil particles from entering the system and damaging the equipment’s performance and usefulness. Promotora Energética E3 is Clean Energy Compression’s exclusive distributor in Mexico. We are proud to say we are working in 60 percent of the natural gas stations in the country. We are also working with a wide network of local partners to complement our offer with additional services. Mexico's vehicle park is over 35 million units, which opens business opportunities related to vehicular natural gas.

Q: To what extent will Mexico’s plan to expand its natural gas pipeline network affect your business and how are you adapting?

A: The government’s ambitious five-year plan to expand the national pipeline system to all Mexican states will directly affect our virtual pipeline segment. We believe virtual pipelines will remain important as the national network will not cover all regions in the medium term. To cope with these changing conditions and take advantage of the Hydrocarbons Law that allows multimodal gas stations starting in 2016, we are diversifying our portfolio by strengthening our share in automotive applications. Increasing the availability of vehicular natural gas in the country will not only improve the sector’s competitiveness but also have a positive impact on air quality in cities.

There are multiple efforts between the government and the private sector to promote the use of natural gasfueled vehicles together with investment in multimodal stations, which must be supported by regulations. There are still areas of uncertainty that need to be addressed to allow vehicular natural gas to reach its full potential. With this in mind, we expect to participate in the conversion of at least 10 percent of the 11,000 traditional gas stations in Mexico.

Q: How do Mexican safety regulations for natural gas compare to international standards used in more mature markets such as Argentina or the US?

A: Promotora Energética E3 uses safety standards based on international regulations that have stricter guidelines than those required by Mexican law. Local regulations still have several loopholes that we avoid by using international best practices. Safety concerns and public perception are particularly important in Mexico, where natural gas compression stations tend to be associated with LPG, a completely different product that requires its own safety guidelines. We have been actively participating in the natural gas compression regulations to improve the norm through the Mexican Natural Gas Association, taking advantage of our team’s expertise in this sector.

Q: How was your experience with Natgas in Queretaro, after opening the city’s first natural gas station?

A: Natgas is a success story in the sector, as well as an example of collaboration between private and public entities. The initiative emerged as a joint effort to improve Queretaro’s air quality while offering citizens an affordable, safe and more sustainable mobility option. Natgas’ first compression station uses Clean Energy Compression equipment sold and installed by us, including aftersales services. The first station's capacity was oversubscribed in six months leading to the opening of a second service station with five compressors. Most of the natural gas demand came from Red Q buses, a public transportation system opened by Queretaro’s government. Natgas is already planning to open two more stations in the city and is considering the possibility of expanding to Celaya, Guanajuato.