Refineries to the Rescue

The López Obrador administration’s energy policy will be marked by a strong emphasis on energy security, says Óscar Scolari, Director General of Rengen Energy Solutions. While upstream activities were reinforced during the last administration, a greater effort is needed to recover the country’s position in the downstream segment. “In the past years, the refining industry was left in total abandonment. In 2018, only 60 percent of the country’s refining capacity was used,” Scolari says.

A refinery out of operation costs the government between US$1.2 million and US$1.7 million per day. The National Refinery System (SNR) groups the Minatitlan, Salamanca, Tula, Cadereyta, Madero and Salina Cruz refineries. Dos Bocas is set to be the seventh refinery, processing 340MMb/d. “In recent meetings, PEMEX authorities have demonstrated the will to revitalize the refining capacity at the Salamanca and Tula facilities. These assets supply fuel to critical cities across the country,” he says.

That scenario represents a huge pool of business opportunities and Rengen wants to be part of it. Scolari is confident about the value that Rengen can provide to PEMEX. “Refineries work on steam, electricity and hydrogen. The lack of any of these three elements can cause an interruption in operations. We represent many equipment lines that are critical in the management of energy, heat and steam. Rengen has also worked in the processing segment and has the required experience in distillation processes. The management of equipment, such as pumps, compressors, turbines and heaters, is part of our expertise,” he says.

Apart from the repair and maintenance services the SNR demands, the Dos Bocas refinery is the flagship project of this sexennial. To date, five auction packages have been awarded to international players, including ICA Fluor, Samsung and KBR. “The last package, which includes the refinery’s storage infrastructure, is about to be published and we are very interested in participating in it. This does not only include the tanks, but other elements such as production lines, separators and firefighting equipment,” Scolari adds.

Another important element that has not been put on the table yet is the energy generation infrastructure that will power Dos Bocas. “This element cannot be found in any package and according to our sources this portion will be awarded to CFE directly,” says Scolari, adding that Rengen can also support the national power company in this assignment. In fact, the company has been active in the electricity generation segment working hand by hand with CFE in the past months. Rengen participated in the modernization of Nonoalco’s turbogas plant, which supplies back up power to 80 percent of Mexico City’s subway. In addition, after several blackouts hit Yucatan’s peninsula in 2Q19, the company offered to ensure electricity supply by providing power generation units powered by either liquid fuels or natural gas.

The Ministry of Energy has also announced that the country needs an additional capacity of 20,000MW by 2025. “To achieve this, project development must start now because the construction of generation facilities can last up to three years. In this industry, these timings translate to short-term periods for developers,” Scolari says. In addition, CFE Director General Manuel Bartlett has announced the five electricity generation projects that have President López Obrador’s approval. The first facility to be auctioned will be a 750MW combined cycle located in Salamanca. “We are going to participate in two of these five projects,” Scolari says, adding the company hopes to win another one. Rengen is also working with the utility company through an unsolicited offer scheme.

Scolari also remains positive about the country’s outlook in the upstream segment. Sooner or later, he says, this industry needs to be developed. “The development of awarded fields must take place, either through public entities, private players or a mix of both. At Rengen, we have the required equipment to manage liquids and gases, as well as to provide the maintenance of the dynamic equipment on platforms.” The company has already approached various US companies that were awarded fields in order to participate in this segment but will await clear signals from the current administration to execute further plans.