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Analysis

All Energy Value Chains Converge Downstream

Fri, 01/17/2020 - 12:56

Characterized by its mining and tourism industries, Zacatecas does not seem like a likely place to develop an interest in the energy industry. However, it was here that Minister of Energy Rocío Nahle began her career, graduating from the state’s autonomous university in 1986 with a degree in chemical engineering with a specialty in petrochemistry. At a midyear visit to her alma mater, Nahle recalled the context that led her down this path. While she was studying, Mexico’s petrochemical industry, then enjoying a globally renowned boom, began a slide into irrelevance as PEMEX divested its downstream resources in an attempt to recover from market forces impacting its upstream assets and balance sheets. During this time, Nahle remembers that Mexico played a role in helping China develop its then nascent petrochemical sector, a memory that seemed ironic given that superpower’s current worldwide dominance in the petrochemical market. But Nahle was not interested in irony but rather in hope and ambition: she used this historical example to illustrate that Mexico can not only recover but create a new golden era for all its energy endeavors.

Nahle set out to broaden her horizons. After studying process engineering at UNAM, she moved to Veracruz, where she studied the economic viability of industrial processes before joining PEMEX at its Cangrejera, Pajaritos and Morelos petrochemical complexes. Here, Nahle developed a broad approach to the multifaceted operations of energy and production infrastructure, performing a number of duties related to administration, finances, process planning, industrial performance and quality control. Forced to reckon with the daily needs of a downstream site and its processing capabilities, Nahle became familiar with the entire path that commodities take before they reach the end user. She also witnessed these same mechanisms from the private sector’s point of view during her time working at Resistol Industries’ Coatzacoalcos sulfate plant.

This focus on processes and planning eventually sparked an interest in the politics that so markedly influence them in Mexico. At first this interest was expressed within PEMEX and the larger energy industry, where Nahle joined prominent internal associations, such as the group of PEMEX engineers known as Constitucion de 1917 and the National Committee of Energy Studies (CNEE). She became a prominent member of the academic community, publishing articles on the state of the oil and gas industry and the viability of various refining and petrochemical projects. Through these publications, she came to be recognized as a reliable adviser for political figures and institutions. As early as 2003, she was counseling members of energy commissions in federal legislative chambers. Nahle’s opinion on the potential of planned energy and infrastructure projects was indispensable to incoming government officials who had gained seats in the 2000 federal election and were thus new to the specific functioning of Mexican industrial value chains and supply networks. She eventually moved to a more public stage when she was chosen to participate in the televised debates and discussions that took place in the Senate during the 2008 passing of Felipe Calderón’s energy reform.

While she was quick to point out that her area of expertise was petrochemical and refining activities, it was perhaps these proximities to the political process that made it clear to her that the issues she highlighted time and time again were integral to the entire Mexican energy infrastructure apparatus, and that her involvement in political activity needed to be more direct to really influence the public sector operators steering the apparatus. This led to run her first political campaign in 2012, representing the 11th District of the state of Veracruz under the flag of the MORENA coalition. She lost that election to a PRI candidate, but won when she ran for the same seat three years later.

Her trajectory has allowed Nahle to play a fundamental role advising President López Obrador on his oil and gas ambitions, given the central role that refining processes and the revamping of the entire national refining system plays in these plans. Nahle’s downstream and petrochemical experience gives her insight into the importance to Mexico’ energy processes of maintaining and expanding the availability of necessary feedstocks, commodities and resources, such as natural gas, power generation and general sources of investment. Although Nahle chooses to refrain from maintaining a public profile outside of what her public job demands of her, she likely has played a vital role in everything from finding new common operational ground and synergies between PEMEX and CFE to evaluating CNH’s upstream projections and planning for the future growth of Mexico’s midstream infrastructure.