Ricardo Diogo
Regional Business Development Manager of Latin America
Oiltanking
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Insight

Oil Storage to Benefit from Global Expertise

Wed, 01/18/2017 - 16:15

Mexico is the biggest opportunity for expansion in the oil storage sector in Latin America and German-based storage giant Oiltanking is deploying to the country in full force to take advantage of the business at hand, looking to provide options in this market segment as new private oil operators coming in the wake of the Energy Reform demand more space for their products, the company’s Business Development Manager for Latin America, Ricardo Diogo, says.

On February 15, 2017 PEMEX’s logistics subsidiary, PEMEX Logística, announced the allocation of its storage and pipeline facilities to the various companies that bid during its first Open Season. “The Open Season demonstrated that third parties will be able to use PEMEX’s infrastructure for storing petroleum products,” Diogo says, adding that there is still a long way to go to meet the needs of Mexico’s future oil and gas industry, and that privately developed infrastructure will also be required.

Oiltanking hopes to help fill this demand for private, thirdparty terminals and storage facilities in Mexico, an opportunity its leaders see as so significant that they reestablished a presence in the country in 2017. The firm is the second-largest independent storage terminal company in the world and has been active in storage logistics since 1972. As the owners and operators of 81 tank terminals in 23 countries spanning five continents, the firm boasts an overall capacity upward of 21 million m3.

Mexico’s oil and gas industry will have no choice but to eventually rely on privately-owned infrastructure, because the current space is simply not enough to cover projected activity. “In the short term, the increasing flow of light and middle distillate imports from the US will present the most opportunities for infrastructure companies,” claims Diogo. Storage facilities for crude oil products may come later, he claims, as it will take companies who won blocks in Rounds One and Two five to ten years to need them.

“Another question concerns geographical location,” he adds, explaining that while northern states will see a bigger increase in activity due to their proximity to the US, the same fact means there is a concentration of competitors vying for business in the area. “We are also looking southward toward the center of Mexico for opportunities,” Diogo says, “and for the same reason we are keeping our eye on the Pacific, not just on the Gulf.” The increase in competition in storage ventures shows the expected boom in Mexico’s fuel market. “The companies who will do well are the ones who get in first, and do so strongly,” Diogo says, alluding to the market’s anticipated acceleration.

Oiltanking’s status as a privately held company also affords it more independence on the market, which is particularly beneficial to any future partners in Mexico, Diogo says. With a long history of joint ventures and partnerships, the company is searching for associates to fortify its entry into the Mexican oil and gas market, promising an entrepreneurial attitude, lean management structure and strong balance sheet, Diogo adds. “We are not only focusing on big projects. We would be very pleased with smaller ventures, including O&M projects.”

Diogo is no stranger to the advantages of teaming up for capital-intensive terminal projects, highlighting the spread of risk, reduction in investment and shared interests as the main benefits. Oiltanking’s financial standing is backed up by its parent company, German trading company Maquard & Bahls, he adds. “Mexico is a country open to the world for business,” he says, “and within a couple of years Oiltanking hopes to be operating facilities in the country.”