Adapting by Strengthening EPC Capabilities

Diversification is one of the ways in which companies adapt to ever-changing markets, and Rengen’s journey into an EPC firm is meant to secure its presence in the Mexican energy industry. “Nowadays, purchasing a product or service is not enough to guarantee the clients’ satisfaction. They require everything to be integrated, installed, and operating. In response to this trend, we decided to provide EPC services to clients in the energy sector,” shares Oscar Scolari, Director General of Rengen Energy Solutions.

“Our international partners supply us with products, as well as supervision and quality control for the installation and operations of our EPC projects, while our local teams take care of detailed engineering, construction and assembly, start-up, and commissioning.” Scolari attributes part of the company’s success to the fact that it has been able to add and attract talent that makes the operations more solid. Rengen has a specialized team dedicated to providing operation and maintenance services, which are offered under long-term service agreements, in addition to continuous preventive maintenance analysis and services. It is quite common to see Rengen performing these services in power generation, but the company also works on servicing, repairing, and providing long-term maintenance to PEMEX’s gas turbines. Part of Rengen’s value proposition includes training PEMEX and CFE technicians in the use and maintenance of the equipment the company sells, distributes, and installs. “We do not keep the technology stored in our facilities, instead training our clients’ technicians and operators, because at the end of the day they will become our commercial ally. If they are comfortable working with our products, they will continue buying from us,” Scolari comments.

The company is looking at opportunities in the downstream sector, where it is finding a new niche to prove its EPC capabilities. “We have observed growth potential in the downstream segment, which has led us to strengthen the group’s engineering division in order to compete in the refining and petrochemical sector, where we plan to participate in the revamping of facilities,” Scolari comments. He explains that the upstream segment is depressed, because in some fields, production costs are higher than the market price. Furthermore, considering the fact that the most promising fields are in deepwater reservoirs in the Gulf of Mexico, he believes the challenges to providing equipment and services will become more demanding and price sensitive. “Conversely, the refining and petrochemicals sector will benefit from the low crude prices, since the market has a real and tangible demand, and the use of products such as gasoline, aviation fuel, and diesel will keep growing,” says Scolari. He adds that PEMEX must increase the production in its six refineries to meet the demand, otherwise it will lose market share to imported products.

According to Scolari, players have to pay more attention to allocating resources where these will allow the most productivity and profitability. He uses Etileno XXI as an example, as Braskem and Grupo Idesa joined forces to build an ethylene cracker that would have not been financially possible for PEMEX. Scolari points out that the petrochemical industry has been open to private participation for many years, and many groups and companies have been involved in this sector for a long time. Although there are available opportunities, both PEMEX and investors have to take into account factors such as the global supply of the products they want to manufacture or import. In addition, Scolari stresses that the petrochemicals industry also follows a cycle that does not necessarily coincide with that of the refining industry. Rengen intends to participate in the Salina Cruz reconfiguration project, and the company is keeping an eye on possible developments in the Madero, Minatitlán, and Salamanca refineries.