Guillermo Turrent
Director General
CFEnergía
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View from the Top

Fuels Trading a Change in DNA that Benefits the Country

Mon, 02/19/2018 - 17:06

In 2013, Mexico faced a set of critical alerts in its natural gas system that forced the nation to curtail natural gas supply, first to CFE, then to PEMEX and to some extent to private industry. The government responded by creating a group to envision the natural gas pipeline infrastructure needed to ensure a steady supply until 2030. That group, says Guillermo Turrent, Director General of CFEnergía, became the foundation for building CFEnergía into a world-class company in the area of transportation and commercialization of fuels.
“CFEnergía was conceived with the purpose of supplying CFE’s six power-generation subsidiaries and optimizing costs in the new fuels market in Mexico, and the expertise of the team that took part in the 2030 group ensures the company can optimize the transportation capacity of CFE’s natural gas requirements through its pipelines,” Turrent says.
The unit is an affiliate of CFE, created after the Energy Reform to import and export natural gas, LNG, liquid fuels, and coal for CFE and other clients (power plants, industrials, petrochemical), as well as to manage its transportation, storage and commercialization in the new fuels market in Mexico to guarantee supply and to generate cost savings for the productive enterprise of the state. Forbidden by law to enter into any contract not bound by market conditions, CFEnergía is taking advantage of the full set of possibilities provided by the market’s opening. “Thanks to its expertise, CFEnergía is also capable of offering long-term natural gas transportation contracts and fuel supply agreements beyond the short-term agreements that CENAGAS provides,” Turrent adds. Proof of that is the long-term contracts CFEnergía has signed with several companies. “We have signed contracts not only with consumers that use natural gas for processes, such as ArcelorMittal, but also with competitors of CFE’s power-generation subsidiaries such as Iberdrola, Blackstone and others.” Because its board acts independently from CFE and the company has its own business plan, the company is capable of providing both CFE and other private customers supply security that is transparent in every aspect, Turrent says.

Although the company has enjoyed benefits as an affiliate of CFE that have helped it become a strong player in the market, Turrent says there have also been challenges related to the company’s status, especially related to economics. “As an affiliate, CFEnergía does not get any federal budget, whereas a subsidiary does, meaning that CFEnergía had to be financially self-sufficient from Day One.” According to Turrent, its status was a burden during the first stage of talent acquisition but it quickly became self-sufficient. “Convincing people to jump or join CFEnergía from CFE’s subsidiaries with their secure budgets to an affiliate involved asking them to take a leap of faith,” he says. “It was a hard task as it meant almost changing their DNA. Fortunately, we were able to attract excellent people from CFE that were in different areas. This, in turn, attracted more bright minds. As of February 2018, we have 106 people in the company, of which 25 percent is made up of previous CFE employees and the other 75 percent is young talent with a thirst for knowledge and experience in the new industry created by the Energy Reform.”
With a mindset that clearly favors market openness and transparency, Turrent is working to ensure fair market conditions not only in the transactions CFEnergía performs, but across the entire Mexican market. “I lived on the other side of the equation for many years, when the only option to buy from and sell to was PEMEX. I am completely against a monopolistic system because I know that competition is needed to create liquidity and transparency in a market.”
Turrent’s next step in the creation of a fairer market is the launching of an online natural gas trading platform, a transparency tool through which all players will be able to see day-ahead natural gas prices in different regions of Mexico. “At the beginning, the tool will be initiated by CFEnergía’s prices (CFEnergía as the market maker), but it is intended to become a benchmarking instrument on which other companies can base their bids and offers. As the prices change in the market, so too will CFEnergía’s, creating a feedback loop and allowing for the creation of several price indexes in Mexico by region.”