Offsetting Refining Uncertainty with Petrochemical OpportunityWed, 01/20/2016 - 11:36
Q: What is your approach to dealing with the uncertainty surrounding PEMEX’s projects?
A: A starting point would be to mention that the reconfiguration of refineries has been put on hold due to the outages of three of the main refining facilities. Earlier this year, the Mexican government announced its plans for reconfiguring the country’s main refineries, but those plans currently remain on hold. Therefore, we are expecting to increase our participation in maintenance services for existing facilities at the moment, instead of reconfiguration and construction of new refineries. We are expecting a restructuring of the NOC's budget, which will allow us to plan our future approach.
Q: What opportunities does the chemical industry offer your company?
A: At the moment, we are seeing great potential for entering the petrochemical sector, particularly in regions like Coatzacoalcos and Altamira. Regarding technology, we have identified a high demand for detailed solutions to reduce explosion risks. At Pepperl+Fuchs, we have strong expertise in this area, and we offer a wide range of automation and instrumentation solutions, such as ports or wireless devices. So far, we have mainly targeted private players in this sector, with Coatzacoalcos being the most important market for us. Right now, we consider petrochemicals as a stronger market for us, as it is one of the few sectors in the oil and gas industry that is benefitting from the drop in the prices of crude oil.
Q: How is your company adapting to the new market conditions, including new customers and sectors?
A: In the past, PEMEX represented around 60% of our revenue share, while the remainder came from the private industry. Therefore, we have employees that are already accustomed to working with private companies, which is highly beneficial for us. In the case of our explosion risk solutions, we do not need to modify the approach we used for private or state-owned companies as they are both concerned with improving their safety standards. In general, we believe that our human talent is our company’s best assets, and we will rely on our staff’s expertise and skills to stay afloat during this transition.
Q: How are you expecting to fulfil your growth objectives for the coming year?
A: We want to expand our business, but we still need to evaluate our prospects to estimate the reach we will have this year. At the moment, we are uncertain about the future of some of our projects, such as the one we signed with the refinery in Tula, which was supposed to be reconfigured this year, or the clean diesel project in Cadereyta. Once we get a clearer picture of PEMEX’s plans, we will be able to carry out a more accurate estimation of our expected growth for this year.
Currently, we see a promising growth potential in the private industry. By the end of the year, we will measure our success by analyzing the company’s revenues from sales as well as the money saved by applying cost efficiency measures. Reducing our operational costs will take particular priority this year, considering the current state of the industry. In this regard, we are analyzing the most optimal strategy to allocate our resources, both human and infrastructural, to obtain improved results without incrementing our costs.
In this sense, one of our key strategies is to diversify, thus lowering our dependence on the oil and gas industry. Nonetheless we will still maintain our presence in this industry, even if we try to increase our participation in other market segments. Last year was particularly difficult for our company, but we are starting to identify new business opportunities, such as the increment in demand for maintenance services.