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Analysis

Refining Project Development

Tue, 01/22/2013 - 13:23

“With over 300 engineers working for Saipem’s Mexican subsidiary, the company is planning on winning new business in the clean diesel market and the Salamanca Refi nery reconfi guration project, which is one of the largest projects in Mexico with over eight plants and more than US$350 billion investment,” says Luis Puig Lara, Saipem’s Commercial Director for Mexico. The company’s experience and connection to Italian oil company Eni has given the Saipem the experience needed to compete for such contracts.

As Eni’s subsidiary in charge of EPC, drilling, and FPSO operations, Saipem has a unique advantage in understanding the challenges facing the Mexican market, Puig Lara believes: “Eni is one of the world leaders in ammonium production, and has built over 32 refi neries, 500 processing plants, and 400 gas plants.” Additionally, the fact that Eni is partly state-owned gives Saipem a very good understanding of the bureaucracy often involved in working with a national oil company. However, Saipem’s experience does not just come from its work with Eni: the company frequently works on projects in Africa, Asia, Europe, and Latin America, bringing added experience from a number of different global locations.

Besides offering vast global experiences and a strong fi nancial backing from the Italian multinational Eni, Saipem’s greatest experience might come from its local workforce in each country. Its Commercial Director, Luis Puig Lara, is a former Director General of Pemex Gas and Basic Petrochemicals, responsible for opening 24 processing plants. Puig Lara’s accomplishments over a 27-year career at Pemex handling various administrative, fi nancial, and executive responsibilities, have given him the necessary tools and connections to further advance Saipem’s interests in Mexico, especially in the downstream segment

Some of the greatest challenges Mexico currently faces in refi ning stem from the fact that Pemex Refi ning has not been awarded the necessary capital to maintain and upgrade refi neries, optimize processes, and develop projects according to market needs. Puig Lara explains that Pemex Refi ning has been handicapped in its ability to develop projects: “in the past, the Pemex subdivision had a large project development group, but as soon as this group was disbanded, Pemex Refi ning’s ability to develop projects was critically a† ected.” Pemex moved instead to offering front end engineering design (FEED) tenders for its larger projects. Puig Lara believes that this scheme is not as e† ective as the old development group was at bringing projects through to fruition: “FEED contracts rarely reach the second phase because Pemex bureaucracy slows the development of a project down to a crawl. Projects are paralyzed in this fi rst stage of development as a result, and often never completed,” he concludes.