Felipe Echavarría
Director General
Gazel
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Insight

Mexico Needs a Mindset Change over Natural Gas

Thu, 01/18/2018 - 11:33

Bad news for some can be good news for others, especially with the benefit of foresight. Take gas prices, for example. When the Mexican government implemented its plans to stop subsidizing gasoline prices at the beginning of 2017, vehicle owners saw prices jump by almost a third in some areas, sparking widespread protest and public unrest.

The transition to market-determined prices left a bad taste for many but Felipe Echavarría, Director General of Gazel, sees things differently. Gasolinazo, as the local media labeled the sudden rise in prices, is a golden opportunity for natural gas to be adopted by vehicle owners in the country, he says.

“In general, 2017 is a special year for natural gas in Mexico because the gasoline price liberalization is making the government and vehicle owners look at alternatives,” he says. The clear winner should be natural gas, which his company supplies at its eight service stations in Mexico, part of a larger network spread across seven Latin American countries.

“Natural gas is the cheapest, most ecological and safest energy resource currently available to us,” Echavarría says, adding that every liter of natural gas used in place of gasoline produces cost savings of up to 50 percent and a 70 percent reduction in pollution levels. On an environmental level, natural gas carries no danger of spilling like LPG or gasoline. The risk of fuel theft is also lower due to the practical difficulties of extracting natural gas and transporting it. One other benefit: the government could capitalize on the fuel’s cost-effectiveness to lower public transport costs, Echavarría adds.

There are 8,900 vehicles using natural gas in Mexico and Gazel dominates the market, providing fuel for over 65 percent of them. With 35 years of experience in the vehicular natural gas market, a strong focus on social responsibility and customer service, Echavarría describes his company as pioneering this emerging market sector. “We operate with high levels of professionalism,” he says, “including our electronic verification system that lists every natural gas vehicle user in the country and must be updated yearly.” These factors position the firm to take on the task of changing Mexico’s mindset toward natural gas in lieu of gasoline, although challenges still lie ahead.

One hurdle is the nature of Mexico’s vast capital city. “It is clear that Mexico City grew to its current size spontaneously, without serious planning,” Echavarría says. This means future pipelines were not taken into account and the straight lines needed for infrastructure development are hard to come by. This problem was compounded, Gazel’s Director General says, by the fact that Mexico focused predominantly on oil production in the past, causing the country to fall further behind in natural gas infrastructure development compared to other nations.

Misconceptions surrounding safety come next on the list of roadblocks to persuade Mexico to convert to natural gas. With countless bloody accidents marring the history of hydrocarbons in Mexico, Echavarría’s concern is the hesitance of people to trust alternative sources of energy. “Our job is to convince the government and prospective users that this is a safe energy resource,” he says, highlighting that developing the market at a balanced pace will be key in ensuring its future safety

In another bid to attract new natural gas users to its stations, Gazel has focused on added value features. “By providing users with clean bathrooms, 24/7 convenience stores and workshops about natural gas usage, we ensure client satisfaction,” he says. But at the heart of Gazel’s mission is controlling prices to truly offer an attractive alternative to gasoline, the executive says.

It is all part of the company’s effort to spark a mindset change. “Gazel is like a church of natural gas,” Echavarría says, “and we are trying to convert people through education, challenging egos and breaking patterns.” With his ambition of seeing five to 10 percent of Mexican vehicles running on natural gas within 15 years, which would reflect the market’s penetration in other countries, Echavarría is optimistic that it will catch on. “2016 was about confronting a mindset, 2017 is about consolidating the new one, and 2018 will be about a new market materializing.”