Ovidio Noval
Director General
API Coatzacoalcos
/
Insight

Port Prepares for New Players

Wed, 01/18/2017 - 10:53

As the effects of the Energy Reform continue to unfold, repercussions have been felt far beyond the country’s oil and gas companies. In addition to players within the industry, Mexico’s sea ports are bracing for an influx of activity in the coming years as the winners of the first licensing rounds begin operations.

API Coatzacoalcos, the state-owned authority to one of Mexico’s most important oil ports, is preparing to capitalize on these opportunities by expanding its Pajaritos harbor, says Director General Ovidio Nova

The Port of Coatzacoalcos, located in the eponymous city in southern Veracruz, handles the second largest volume of liquid cargo in Mexico, the third largest volume of agricultural grains and boasts the only Roll-On/Roll-Off (RO-RO) Ferrobuque service in the country. It is split into two separate areas, Coatzacoalcos and Pajaritos. The Coatzacoalcos port area consists of 11 docking points, 14 private terminals and four companies dedicated to intermodal operations, while the Pajaritos area has 18 docking points operated by three companies.

The Pajaritos Harbor is the focus of API Coatzacoalcos growth plans, including a harbor expansion from 272m to 660m. The project was approved by the Ministry of Finance after initial funding issues and shows API Coatzacoalcos’s confidence that a surge in activity at the port is just around the corner. As well as securing public funding for the project, Noval says that “several private enterprises are interested in investing here and we are currently in talks with them. Either way the port must grow.”

Ninety-six percent of the country’s petrochemical industry is located in this area of Coatzacoalcos and Minatitlan, so chemicals and petrochemicals are an important industry here.We do not receive cargo such as cars or other commercial products because this is not an area where the port has comparative advantages,” Noval says.

One of the port’s most attractive features, Noval says, is its unique Ferrobuque service, which connects with the port of Mobile in Alabama every four days. The freight cargo ship transports rail cars containing liquids, grains, containers and bagged goods and is the only one of its kind connecting Mexico to the US. The Ferrobuque gives the port a distinct advantage in competing for more business, with easy and straightforward logistics. As the Mexican oil and gas market opens up, connections from this part of Mexico to the US will grow in importance, especially considering that six of the 15 shallow-water blocks to be auctioned off in Round 2.2 are located just off the coast of Veracruz, he adds.

In 2016, President Peña Nieto announced proposals to create Special Economic Zones (ZEEs) in several areas in the south of Mexico to promote economic development. Coatzacoalcos was among the ports included in the plan. Noval says the proposed changes would make the port extremely attractive to incoming companies. The majority of Mexico’s petrochemical industry is located in Veracruz, so companies specializing in these products will also find comparative advantages at Coatzacoalcos, he adds.

There is still some way to go to raise the capacity and functionality of the Port of Coatzacoalcos, and Noval identifies accessibility to and from the port over land as an area for improvement. Investment in highways and trains surrounding the port are vital, he says, to better connect it with surrounding factories and thus attract investing companies.