Abraham Zepeda
Commercial Director
Grupo Hosto
View from the Top

Gap in Gas Market Opens Opportunity

Thu, 01/18/2018 - 17:09

Q: Grupo Hosto is expanding its business into gasoline storage and distribution. Where are you in that process?

A: Grupo Hosto is obtaining construction licenses to build gas stations and storage units. We already acquired plots of land and we are waiting for the permits before we proceed to build the terminals during 2017. We have also entered the liquefied petroleum gas (LPG) sector and our intention is to build 10 plants in the Valley of Mexico. The first opportunities we detected in the gasoline realm was with the liberalization of fuel imports and the fuel price. There are around 600 companies registered to import gasoline, around 12,000 registered gas-station owners and thousands of haulage firms but there are no registered storage companies. We saw this gap in the market and decided to fill it. PEMEX is the only current storage supplier and distributor of fuel and given its size and the series of licensing rounds, a private company can offer versatility and really satisfy customer needs. 

Q: How is Grupo Hosto positioned to seize this opportunity in the storage and distribution of fuel?

A: We already own the necessary infrastructure to carry out this endeavor and moreover we can optimize our existing technology to improve the costs involved with expansion. Our operational costs are going to be lower than what PEMEX can achieve. We are more profitable and competitive than PEMEX in this area because our infrastructure will be simpler and cheaper, resulting in smaller investment costs. This costefficiency will lead to cheaper fuel costs for the end-user. The key objective is to charge the customer less. In 2017, we will already have at least two gas stations in operation and by 2020 we will have eight up and running. We also made the strategic move of acquiring a company specialized in commercializing these new products. 

Q: What are the biggest challenges for PEMEX as it attempts to increase production at its refineries?

A: The refineries need responsible financial investment and attention. A refinery itself cannot be responsible for the loss of hydrocarbons in pipelines because its job is simply to produce. A great challenge will be defining who is responsible for the losses in product after it leaves the refinery. Another obstacle will be the contractual schemes. There is still resistance when it comes to macro-contracts, with some decision-makers still clinging to the old method of signing many smaller contracts for a project. This fragmentation did not work well and the industry is calling for integrated projects defined by one larger contract. This would involve one company being responsible for executing the entire maintenance contract at a plant. Such a scheme would prevent the many issues with accountability and responsibility that arise when the contract is split between smaller parties. 

Q: What issues will PEMEX face in the coming years?

A: A pressing issue in the Mexican oil and gas industry right now is refinery maintenance, a service that Grupo Hosto has been providing for over 30 years. Refinery production rates have dropped due to a lack of maintenance work but we believe that PEMEX’s directors have finally realized that investment is indispensable. We expect to see a lot of work and new contracts coming our way in refinery maintenance. PEMEX’s choice of maintenance company will define the future success of their refineries. Grupo Hosto can offer competitive prices, advanced technologies and solid guarantees. 

Q: How is Grupo Hosto answering the industry’s demand for innovative technologies?

A: Grupo Hosto is active in investing in new technologies for oil refineries, which waste a lot of money buying new catalysts. We recognized this problem so we now offer mixed catalyzers with reaction additives, which save money and are more efficient. We supply the catalysts directly to PEMEX, saving the NOC 20 percent in costs. Soon we will distribute Atmos technology, which detects leaks in gas pipelines. If there is an interruption in the flow of product, this device will detect it, helping fight problems like fuel theft. We also partnered with Honeywell to work on the optimization of reformer plants.