Fernando Zedillo
Associate Director
View from the Top

Opportunities for Mid-Sized Contractors

Wed, 01/22/2014 - 15:56

Q: What is the history behind CCIPSA’s involvement in the oil and gas industry?

A: CCIPSA was born on November 2006 in the city of Coatzacoalcos. It was originally a real estate company rather than an integrated construction contractor, so its original goal for the oil and gas industry was to supply property to the petrochemical industry. 2008 and 2009 saw the rise of projects that marked a new phase for the petrochemical industry. Many investments got underway, such as the one that led to the creation of Etileno XXI, in which CCIPSA participated. Our relationship with the oil and gas world evolved very naturally as we worked on projects in locations close to our base in Coatzacoalcos. Based on our personal backgrounds, we are very familiar with PEMEX’s processes for storage and distribution terminals, refining, and the downstream sector in general. Although our company is young, it is filled with very experienced people. Financially speaking, we are very wellestablished, which gives our midstream and downstream oil and gas projects considerable viability.

Q: What kind of opportunities is PEMEX offering to CCIPSA as a downstream contractor?

A: We do not yet have a contract directly with PEMEX but we will be working as a contractor for PEMEX in various areas, through associations. One of these areas is refining, which includes work to be done in the Minatitlan refinery. We have formed an alliance with Foster Wheeler to collaborate on the development of preheating trains that make the refining process more efficient. CCIPSA is taking care of part of the engineering for this project. To do so, we are collaborating with local universities, such as the Technological Institute of Coatzacoalcos and the Technological Institute of Las Choapas. We have also developed recovery systems to recapture crude that is otherwise wasted in residual water as part of the refining process and reintroduce it back into the refineries. These recovery systems address a larger issue. The Mexican downstream sector, partly due to a lack of maintenance, has a problem with managing effluents in general, and our engineering services can help them handle that. We also see a lot of opportunities in the building of fire detection and protection systems.

Q: What are the crucial success factors for companies like CCIPSA in the downstream segment?

A: The future of companies our size in the downstream sector depends on the alliances they are able to build and the successful collaborations they manage to execute. The building of effective and reliable supply chains is also crucial. For high-impact and strategic projects, PEMEX does not allow the involvement of suppliers from countries with whom Mexico does not have a free trade agreement, which excludes all Asian countries. This has an obvious impact on the process of building supply chains, especially for parts such as tubing. All contractors must be conscious of this and of all the other requirements that PEMEX imposes on suppliers, which can be very conservative and strict. I no longer see any differences between the standards that PEMEX sets for its contractors and the standards that the private sector asks for. For example, Braskem Idesa asked for world-class standards for those seeking to supply the Etileno XXI project. This applies particularly to the areas of security and environmental impact. This is why so many opportunities have opened up for us, as we have built alliances with companies that fit this profile. The contracting process has changed not only in Mexico but worldwide, and one of the biggest risks in this business comes from a company’s inability to adapt to the terms of such contracts.

Q: What design and engineering factors could help improve the operational security of the downstream sector?

A: It is a simple matter of taking these concerns into consideration from the earliest planning phase of a project. In my estimation, the main problem in this regard is that advancements are not made in an integrated fashion. For example, there was a lot of talk of reengineering and updating the refining efficiency for fuels in Minatitlan. A lot of money and resources were spent on this but the need was addressed in an incomplete fashion. When this happens, risk factors are scattered and left unattended all over the project. One of those risk factors, for example, is forgetting maintenance as a top priority in all phases of a project. Executing all appropriate and necessary reliability and quality control tests with all of your suppliers is essential to minimize risk.