Best Practices, Accelerated Execution Mark New Strategy

Q: What are the main differences between the priorities for PEMEX’s refining activities before and after the reform?
A: Before the Energy Reform was enacted, regulation was restrictive for PEMEX. In contrast, now it will be easier to implement best practices and to execute investment projects in an accelerated way through joint ventures and with business operating partners. PEMEX TRI’s strategy is based on these opportunities and it will be implemented through safe operation of its assets, with an emphasis on its economic performance. PEMEX TRI will assess on a permanent basis the marginal contributions of its operations, safety and preventive maintenance. We will increase operational discipline and processes reliability and also implement highly profitable operational improvements.
Q: What role will partnerships play in the revamping of refineries?
A: Partnerships and risk-sharing with third parties are strategic for PEMEX. All around the world we find this successful business model and PEMEX is looking to take advantage of it. We are looking for strong partners willing to share operational and market risks, as happens everywhere in this industry. Risk management is well-known among companies in general and the energy sector is no exception.
Q: What parameters are used to define the optimal processing level, estimated at about 1.2-1.25 million b/d?
A: The fundamental decision is to process crude until the incremental margin is equal to the marginal cost of supplying the demand with imports. Among the measures being taken to reach this optimal level are operations profitability, crude oil prices, fuel prices, maintenance programs and available infrastructure to maximize profit or profit for refineries, as measured by the variable operating margin calculation.
We have been reinforcing the timely fulfillment of our operational programs and also of our maintenance and reliability programs. The safety of our personnel and of our process plants is our main concern. Priority is given to follow-up on every day agreements among different areas involved with production.
Q: What plans are in place to reduce nonscheduled shutdowns at PEMEX’s refineries in 2017?
A: PEMEX’s first priority is to maintain safety indexes. PEMEX TRI has been facing operational difficulties for some years now and several efforts have been in place to curb nonscheduled shutdowns. However, these efforts have not attained sustained positive results because PEMEX TRI has not been able to consolidate its processes, procedures and operational practices. Maintenance and safety programs are geared toward reducing the nonscheduled shutdowns index and to improve reliability. We are implementing international standards to build predictive and preventive KPIs for timely decision-making that reinforces our plants reliability. During 2017 PEMEX has planned to invest US$265 million dollars (MX$5.03 billion) on its maintenance program.
Q: How has PEMEX’s downstream and midstream strategy been impacted by Open Seasons?
A: A basic assumption for the success of the Energy Reform is the price liberalization to really have an open market. The recognition of opportunity costs is a basic requirement in the transition phase since open market prices will reflect this in the future. This includes not only the price of the commodity but also the cost to serve or supply the different markets of petroleum products. This is the way it works in an open competitive market.
The other factor critical for the success of the process of liberalization of the Mexican petroleum markets is the open access to PEMEX’s existing infrastructure. As mandated in the regulation, PEMEX is offering through the open seasons the available capacity in the different systems. Working together with other operators on existing infrastructure is the new model that PEMEX is beginning to implement.