Providing Integrated Mexican EPC Services

Q: Where does your main differentiator lie, and what are your most emblematic projects?

A: Arendal has emblematic projects in the downstream, midstream, and upstream segments. In downstream, we have two main projects, namely the ultra-low sulfur diesel project that we are working on with AMEC Foster Wheeler for the Salina Cruz refinery, which will significantly boost economic development in the area. We are also reconfiguring a catalytic conditioning plant in Minatitlán, and although this is a medium sized project in economic terms, it is an extremely complex one that focuses on the heart of the refinery. In the midstream sector, we are completing the Los Ramones project in collaboration with an international consortium. In the upstream segment, we are working on the construction of a gas collection station in Lakach, which is a tie back to shore-type projects where all of the extraction is carried out at a depth of 1,500m and the gas is sent directly to land without having to pass through any platforms. We are building the collection facility that controls, centralizes, and coordinates the gas extraction. One of our biggest achievements for 2015 was the acquisition of the Mexican branch of In-Dive, an international firm specialized in offshore submarine construction.

Q: How is Arendal transitioning from an EPC company to a developer?

A: The main challenge has been changing the perception of our work. As a developer, we will no longer approach a project as a finite job, but rather as a long-term investment. This changes our areas of investment, our expectations, and the impact of our activities on different stakeholders. The Energy Reform served as a catalyst for the company’s decision to become a developer since an open sector and the need for investment created the right scenario for us to go after this type of project. We started out as a specialized contractor 20 years ago doing civil work. We quickly grew in revenue and complexity, and our main strategy today is to undertake complicated projects, which is where we believe we can add extra value. In our company, we have people from various industry sectors, including CEMEX, Vitro, and Aeroméxico, and different parts of the world.

Q: How do you source your employees and ensure they are up to date on the latest industry standards?

A: We recently opened Oaxaca’s first school of welders for the use of PEMEX in conjunction with the local community. In agreement with the NOC, we are providing all of the equipment and teachers in Salina Cruz, Oaxaca. We are effectively creating the labor force we will need to achieve the next step, while being socially responsible and nurturing the growth and development of a community. Furthermore, we also have a program called Professionals in Development whereby we hire 60-70 of the brightest young professionals from various universities and allow them to rotate throughout the various layers of our company, undertaking different positions, each of which lasts six months. Our trainees can then decide in which area they would like to begin their career. Finally, last year we launched Arendal University with specialized programs to train our people.

Q: What is your M&A strategy planned for the Mexican market and the rest of Latin America?

A: Arendal prefers organic growth. In this specific case, we chose to carry out the acquisition of In-Dive because we needed to obtain certain capabilities in the short term. The timeframe that we had to develop that capability had passed, and we needed it to secure a certain place in the industry, which is why we turned to non-organic growth methods. In the future, we will not resort to this option for growth, but rather for the acquisition of certain capabilities within a specific timespan. We understand that we can contribute to other companies with knowledge, expertise, and national content. Our focus is currently on expanding our developer business in the oil and gas industry, and expanding our EPC presence in the offshore market through our acquisition of In-Dive, using a pay- by-service approach. Our main markets for expansion will be offshore, O&M, and EPC projects, and our third priority will be to further our investment in the industry. Moreover, we are going to reopen our power generation and transmission segment as part of our expansion plan. In terms of projects, we will look to undertake extremely complex developments, as this is our area of expertise.