Alberto Escofet
Country Manager
View from the Top

A New Environment for Midstream Contractors

Wed, 01/20/2016 - 15:09

Q: What strategies has Enagás implemented in order to excel during this complex period for the industry?

A: The activities we have carried out in Mexico involve projects such as the gasification plant in Altamira, where the results have been positive and have strongly contributed to the company’s success. In December 2015, we began the operation of our compression station at Soto La Marina, as well as that of the Morelos pipeline. The company is working diligently to increase its position within the Mexican market. Our first international investment was in the Altamira regasification plant (TLA) in 2011, and from there our participation in the international market has significantly increased, as we have operations in Chile, Peru, Sweden, and in the Trans-Adriatic Pipeline Project (TAP), which is part of the Southern Gas Corridor. Enagás established presence in eight countries only four years after its first international investment in Mexico.

Q: To what extent has the Energy Reform facilitated investment for the development of oil and gas infrastructure?

A: The regulatory framework that the Energy Reform has established is far more flexible and offers a larger variety of options that were not previously available. These guidelines allow for greater creativity and proactivity from companies like ours, and create conditions that encourage the development of new projects that would have been impossible in the previous scheme. Fibra E is a tool that will finance the development of new infrastructure in the country, and although it may take some time before it reaches its optimal potential, it will definitely increase the development of the infrastructure the country needs. The companies that will benefit the most from this instrument are the ones that already have existing infrastructure, given that they can contribute their incomes into an Investment and Real Estate Fund (Fibra) and recover part of the investment they made to allocate it into new projects. Our infrastructure has not yet matured enough to utilize Fibra E to fulfill the company’s financing requirements.

Q: What have been the lessons learned throughout the development of the Morelos pipeline project?

A: This project, which is currently supplying CFE’s central generation plant in the state of Morelos, has served as a valuable learning experience for the company. There were several challenges to overcome, such as land management and the development of strong relationships with the various municipalities. The company was faced with the challenge of adapting to the new regulations spawning from the Energy Reform, and Enagás became the first transporter to have the Open Season procedure approved by CRE.

Q: How will the development of the Texas-Veracruz pipeline impact the country?

A: Enagás has vast experience working on semisubmerged pipelines, and this project that will connect the south of Texas with Veracruz is in our strategic five-year plan. This will be an extremely important and challenging pipeline that will transfer around 106mcf/d and will demand the participation of experts. The pipeline will have both land and underwater sections, which entails overcoming several obstacles in land rights management. The development of this pipeline is being promoted by CFE to supply electricity generation plants along the East coast of Mexico. This is the missing piece to a puzzle that will facilitate the transportation of natural gas throughout Mexico and that will ensure that all of these regions have access to this fuel, as well as increasing the network’s flexibility. Mexico is not producing enough gas to be selfsufficient, but this is no longer an alarming issue because the country can benefit from its geographical position.

Q: What are Enagás’ goals and strategies to increase its position within the Mexican market? A: We are currently involved in the bidding process for various CFE projects and optimizing the usage of existing infrastructure focused on fulfilling the current and future market requirements for natural gas transportation and storage. Our corporate strategy seeks to consolidate Enagás in Mexico as a key operator, reinforcing its long-term commitment to the country. Enagás will continue supporting the development of projects that help strengthen the energy security and sufficient gas supply in growing countries with stable regulatory frameworks, such as Mexico.