Alberto Escofet
Country Manager
View from the Top

Spanish Gas System Operator Makes Inroads in Mexico

Wed, 01/21/2015 - 10:32

Q: How has the development of Mexico’s natural gas usage resulted in imbalances between local supply and demand?

A: Mexico represents an important market for Enagás and the company sees real opportunities to become involved in relevant projects for midstream natural gas infrastructure. The potential for natural gas market development in Mexico is huge, due to the availability of enormous volumes of natural gas in the US and Mexico. Natural gas is very competitive today compared to alternative fuels, and the Energy Reform will prove crucial to facilitate the investment in energy infrastructure that this country needs.

Q: Why did Enagás decide to enter into a JV with Vopak to acquire the LNG import and regasification terminal at Altamira?

A: Enagás is a leader in regasification and has the best technology available to operate and optimize the efficiency of such infrastructure. Accordingly, the investment opportunity in the Altamira regasification plant was consistent with the development and internationalization process of Enagás and also came at a perfect time. Since the Altamira terminal was acquired in September 2011, it has over 3.2 million hours without LTI. During that time, we have obtained the ISO 9001:2008 and 14001:2004 certifications while being broadly recognized for running a clean and socially responsible operation. Building on that success, we anticipate that Altamira may soon become a strategic storage facility, especially once Mexico builds the pipeline network envisaged in the National Development Plan. We are also analyzing, jointly with Vopak, the expansion of the terminal in order to provide a new service based on LNG truck activity. This expansion project will enable the development of local natural gas markets by directly supplying LNG to urban customers where a transmission system is not available.

Q: What have been Enagás’ main achievements in the construction of natural gas pipelines and compression stations in Mexico?

A: The construction of the Morelos-Tlaxcala gas pipeline and the Soto la Marina compressor station marked our first greenfield experience in developing natural gas infrastructure in Mexico. This involved us adapting to different market practices. For instance, our technical experts developed more detailed basic engineering under new specifications for different clients. During the construction phase, we also improved our security protocols in order to avoid security issues. Furthermore, the procurement process has been quite challenging in terms of dealing with local market requirements. We had to search for new domestic suppliers and adapt the way we used to work with our traditional suppliers in Spain. Achieving these goals gave Enagás more flexibility to operate in any international environment. Today, the Morelos-Tlaxcala pipeline is nearing commissioning and construction will soon end on the compressor station. The pipeline involved a very specific project in terms of its social impact and the complexity of achieving rights of way. At the end of the day, we were able to overcome such obstacles, in no small part thanks to the support and commitment of CFE and our partner, Elecnor. Enagás learned many lessons that will certainly be applied sure in future projects.

Q: What were the main lessons you learned from your involvement in the Soto La Marina compressor station in Tamaulipas?

A: For Soto La Marina, we entered into a partnership with Fermaca Global, which provided local insight as a company with direct experience in the Mexican natural gas market. Overall, the region of Tamaulipas is challenging to operate in as it requires high standard security protocols to be followed while trying to keep on schedule. Furthermore, as the station is part of a pipeline owned by PEMEX, we worked closely with the company to establish operational protocols and kept its people permanently informed as to the progress made on the project. We also worked very closely with the likes of CRE, CFE, and SEMARNAT in order to fulfill the regulatory and technical requirements. Conversely, Enagás’ main mission in Spain has been to ensure the efficient operation, the open access for suppliers, and the security of the country’s gas system. This covers 11,000km of pipelines, 18 compressor stations, three underground storages, and four regasification plants. Over the 40 years that we have been in this position, the Spanish gas system has become a benchmark of knowledge and innovation in the sector. This is what we brought to the consortium in Tamaulipas and to the Mexican market generally.