Ready Stock, Right Calibration, Purity Key Value Adds

Q: How did Gaeli Diesel develop its core business and what strategic challenges did you face?

A: We divided our family business into three main areas: hotel chains, marine diesel and real estate, together with new projects. Back when Gaeli Diesel was solely focused on marine diesel and other fuels, we were the only distributor in Ciudad del Carmen. By 1998, our family business built a reliable reputation based on a long history of best practices. We covered three points of sale: Dos Bocas, Ciudad del Carmen and Seybaplaya. Marine diesel is the measuring stick of the offshore industry because it is the first business that companies look into due to the nature of their operations. If major players, such as ENI, Talos Energy or Fieldwood Energy, come to town, the first companies consulted are oil or marine diesel distributors since the former need the latter’s ships to explore the extension of the blocks they bid for and won. We are fortunate enough to see business pick up after two and a half very complicated years and are glad the Energy Reform helped with that, considering all the newcomers wanting to get a foothold in the liberalized market, increasing demand for what we sell as local businessmen.

Q: What is the specific added value Gaeli Diesel provides in an increasingly competitive market?

A: Three key factors are behind our added value. First, our diesel stock is always readily available because of our transportation capacity and guaranteed by our companyowned truck fleet. We prevent our clients from losing money by securing sizable diesel shipments with guaranteed delivery in the agreed-upon time. Second, we always deliver the right calibration between liters of diesel provided and what we charge for it, employing our certified dispatch meters and verification by public notaries. Third, the purity level of our diesel is above market standards. We never pour diesel in any container that is not ours, avoiding contamination. The technologies we use allow us to offer diesel that is free of water and impurities.

Regarding offshore activities, most of the diesel that we sell in Seybaplaya and Ciudad del Carmen is sold directly to the ships from our premises. In Dos Bocas, we transport our diesel in our automotive tanks and distribute it wherever needed. When we need a vessel for transportation, we hire oil tankers. We are looking to acquire our own vessel and integrate it to our transportation service portfolio, thanks to our sales performance.

Q: With these new developments in the oil and gas sector, how are you increasing profit margins?

A: Many distributors in the country, marine and land distributors alike, are looking to capitalize on the new provisions brought about by the reform and analyzing the possibility of closing alliances with gasoline-supplying entities other than PEMEX. One of the new options available is G500, a major company integrating thousands of marine and land-based gas stations. We are thinking of joining this Mexican consortium to have access to Glencore, their sole supplier.

Q: How has CRE advanced on the matter of fuel storage, distribution and transportation permits?

A: There has been a lot of speculation regarding the speed with which the Energy Reform has been applied. Businesses like ours, dependent on the oil industry, want the process to be swift and effective. When the number of contracts from PEMEX started to decrease two and a half years ago, there was an even greater interest in an expedited application of the reform to allow a full-tilt market entry by new companies. Reality caught up with these expectations amid the decreasing rate of PEMEX’s contracts coupled with the slow entry process for new players. The effects of this perfect storm are wearing off and the gap between a poorly performing PEMEX and a liberalized market is starting to shrink, which is desirable for an improved oil and gas market. CRE is a major factor in this process. Compared to other countries that went through a similar transition, Mexico is not going any slower. Reforms take time, particularly when they rock the foundation of the previous status quo. The pace and impact of the reform rest on CRE’s regulatory effectiveness.