Patricio Gutiérrez
View from the Top

Develop Synergies to Develop Strength

Wed, 01/18/2017 - 11:27

Q: What role do ANIQ’s member companies play in the Mexican oil and gas industry?

A: ANIQ has close to 270 members including producers, distributors and some manufacturing companies that use raw materials coming from the chemical or petrochemical industry. Just over 95 percent of the industry is incorporated in our organization. Within ANIQ we have many different commissions, one of which is the energy commission that works on specific topics related to the energy sector, including oil and gas. Through this commission we try to be as close as possible to the development of the energy sector across the value chain. We try to promote synergies in the industry that will lead us to more reliable long-term competitive supply of raw materials. If we can achieve this, our industry can grow and become stronger. If any of the federal or independent energy agencies want to create regulations we need to ensure they will not create barriers or affect the competitiveness of our industry.

Q: What examples demonstrate ANIQ’s role in the industry?

A: One situation in which we were strongly involved was the quality specification for gasoline or fuel. Some of the participants in ANIQ’s energy commission, like BP, Exxon and others that want to import gasoline into Mexico have a vested interest in this subject. We actively participated in the development of a strong quality specification that can be applied to Mexico and that also represents the interests of ANIQ’s members.

Q: What happens when the interests of your members conflict?

A: We always work toward a consensus and to represent the industry and not a particular fragment, which is extremely important. I think part of the strength of ANIQ is that we try to avoid any political interest. There have been times where the particular interests of two members have conflicted. In these cases we try to align their interests. Ultimately we all need to supply gasoline to the customer, whether it comes from PEMEX or any other company that imports the product. Our real goal is the development of the industry and the development of Mexico as a country

There was an initiative from the Ministry of Communications and Transportation (SCT) to prevent the transport of six hazardous materials. Of those six, only one – ammonia – is moved by tank trucks, with the others transported in bulk by railcar. Ultimately, all the players involved in the consumption of these products agreed to compromise with the government to allow a transition period wherein the size of the trucks would be decreased and limited.

Q: What are the main opportunities you see for your clients in upstream given Round 1.4?

A: In upstream new players will enter and oil and gas production in Mexico will increase over the mid to long-term. All those new players will ultimately need to buy services, products, different raw materials and consulting services from Mexican companies. This is a demand our country can meet. Previously, even though PEMEX was a large customer it was difficult to have a relationship with the NOC because it called all the shots. It could shift the goalposts at any time and there was really not much companies could do about it. With more players and higher standards there will be greater competition. On the other side of upstream, when more players enter, Mexico will have more raw materials for the country’s development and we will be able to decrease the huge commercial deficit in our sector.

The chemical and petrochemical industry has enjoyed steady growth of about 6 percent per year in the last 15-20 years, which is unprecedented. This equates to demand of around US$40 billion. The problem is that 80 percent of total demand has been covered by imports. This is the potential we have as an industry.

Q: How much do you see oil and gas impacting growth objectives?

A: Using the example of Braskem IDESA, the company has a 20-year contract that requires 66,000b/d of ethane. This is just one project that produces 1 million tons of polyethylene, which is valued at around US$1.5 billion. If we capitalize on the opportunities arising from the Energy Reform, we may be able to reduce around 40 to 50 percent of imports in the next 15 years.

Q: To what extent does the Energy Reform return power to your members?

A: This is an opportunity for suppliers but I think this will take a lot of time because there must be a great deal of investment across the value chain in E&P, midstream and downstream. The only company that participates in midstream is PEMEX so for some years we will continue to work with PEMEX, which is OK so long as we have an adequate transition period. We may have some opportunities to work with natural gas producers and at that time companies can create alliances with PEMEX whereby the chemical company or upstream company will supply the natural gas, which PEMEX can separate and return liquids or raw materials to our members. It will take at least 15 years for true competition to emerge because PEMEX has been the only company building midstream infrastructure.

Q: How important will new infrastructure be in achieving a reduction in imports?

A: This will be extremely important because even though the chemical industry can try to reduce imports by 40 percent, the remaining 60 percent will be imported. We need infrastructure and storage at ports to reduce logistics costs. It is a daily battle to reduce logistics costs related to both exports and imports.

Q: How is ANIQ’s vision changing and how might it look in five years?

A: We envision an increase in our ability to participate more in the development of the midstream sector. We do not want to remain at the back of the value chain but rather, we would like to be more involved in promoting the midstream. The new participants in the market could also be incorporated into ANIQ but it is important to stay focused on what we do well and not lose our vision. One of our strengths is that ANIQ has always been focused on downstream and distribution of petrochemicals. But we must constantly evolve and if there is something of value to the industry, we must assess whether it is important for us to be involved with it.

Today the industry is suffering from a decrease in the availability of raw materials, which is part of PEMEX’s overall issues. PEMEX is facing a difficult financial situation. It is focusing on improving this but in a way it is losing its focus on the rest of the value chain. This is part of why ANIQ and its members are affected because we stand at the end of the value chain. We need to communicate the message that a lot of the raw materials our industries need remain underground and those need to be extracted for us to flourish.