Pedro Arjona
Salvador Segovia
Salvador Segovia
Director General

A Guiding Hand for Industries and Regulators

Wed, 01/18/2017 - 14:36

For Mexico’s hydrocarbons sector to fulfill the promise of the Energy Reform, it takes more than just capital and the ingenuity of companies willing to face the risks of a still little-known business environment. The regulatory framework must ensure that those entrepreneurs are following the best practices and complying with the requirements to ensure safety and proper operation of their present and future assets.

Both the experienced hands and the newest entrants into an industry that was closed to strangers for the best part of a century can help guide the drafting of new rules and help players comply with them, says DEISA President Pedro Arjona.

“The speed at which the Energy Reform unfolded meant the new regulatory bodies did not have enough time to fully establish themselves and implement the new regulations and standards that such reforms require,” says DEISA Director General Salvador Segovia. This, adds the Mexico-based company’s President Pedro Arjona, can cause uncertainty for players in the market “because they do not know who to turn to for what.” The industry, he says, is still waiting for regulatory clarity.

DEISA turns 50 in 2017 and with that many years of assessing mainly Mexican natural gas standards under their belt, the company believes it is perfectly positioned to continue contributing to the authorities’ efforts to develop and shape new market regulations.

Entities like ASEA, CRE and CENAGAS, three of the sector’s main regulators, “have not managed to communicate with each other adequately.” Players in the verification industry could be drafted in to help smooth out the differences and improve communications, Arjona says.

Verification units help industries speed up the adoption of new regulations and compliance with the old, reducing the workload of usually understaffed and overworked official regulators around the world. DEISA often participates in committees where its specialized technicians impart knowledge on the sector. “We were born with the philosophy of adding value to the change process by coordinating with the authorities,” Arjona adds.

Without the participation of experts such as DEISA helping to smooth out regulations from different authorities and pointing out the commonalities of each, new industries such as Mexico’s hydrocarbons sector risk overregulation and the slowdown of investments, as well as an overlapping of power hierarchies. “One body is not above the other, they simply have different roles to play,” Segovia says. Despite their warnings, both executives agree that CRE has been doing a good job of regulating the industry for several years. The newer official entities could definitely take a page from CRE’s book since it has been overseeing the sector for longer. Following in CRE’s footsteps could also help to create a more solid market, with a balanced advisory board, they add.

DEISA inserts itself in the evolving scenario as a robust and reliable answer to these problems because it can act as an independent adviser. In such a role, transparency is the key to preserving trust between the firm and its clients, Arjona says. If any conflict of interest arises within the organization, it will be reported immediately. “As well as undergoing annual external and internal audits, DEISA sends quarterly reports to the Mexican accreditation authorities and bodies to prove our objectivity, transparency and impartiality,” he adds. The group’s commitment to objectivity is paramount given the power of its role and the co-responsibility bestowed upon it.

Besides a commitment to advancing the Mexican regulatory framework, the company also has a strong focus on talent development and retention as part of its success strategy. “In an ever-evolving market, we need to constantly update our staff’s training,” Arjona says. The group established several years ago an agreement with Mexico’s IPN technical college to sponsor groups of engineers.

Growth and change are on DEISA’s agenda, with plans to expand their base of qualified technicians and promote collaborative agreements with more academic institutions or related organizations. “Our promise is not just with the industry, but with Mexico,” Segovia says.