José Luis Uriegas
CEO
Grupo IDESA
/
View from the Top

Taking on Mexico's Upstream Sector

Tue, 01/21/2020 - 19:22

Q: What is the status of work on Block 21 Tecolutla in the Tampico-Misantla Basin?

A: In September 2018, Grupo IDESA was already producing crude oil and gas to sell to PEMEX. It is a small field, yet it is relevant for us because we are continuously learning about upstream activities, given that Grupo IDESA has been mostly involved in downstream and midstream. In the last few months, we also started drilling an additional well, TEC-11. It is still in progress and we expect additional production in the coming months. We are excited even though there is uncertainty in the upstream segment. We feel confident because we know the country needs PEMEX, but also the private sector. The government has clearly said that it will be respecting all of the awarded contracts. That has been case for us. We are doing what we expect to do and we are learning a lot.

Q: What has been Grupo IDESA’s experience venturing into the upstream sector, as most of its activity has been in downstream and midstream?

A: It is a completely different business. You have to be patient and many things are not as easy to predict as they might be in other sectors. For instance, in the petrochemical industry, you build the project, you produce and you know exactly what the output will be. Here, you carry out geological studies with certain expectations but then you can be surprised with good or bad news. We have also learned that geological studies are extremely relevant to increase your chances of being successful. This also means that you must invest a great deal before even seeing any result. Companies also must have a close relationship with the surrounding communities, not only so they respect your business but truly support the company because you will bring value to those communities. We are showing our partners how to do business in Mexico and how to create fruitful relationships with both PEMEX and the communities in which we work.

Q: What has the company gained from creating alliances with international players?

A: When establishing alliances, it is important to have companies that can complement each other in technical and cultural aspects. We like to create partnerships when projects are too risky or too large, so we can share the investment or the risk. But we carefully analyze each partnership because in the end, it is practically a merger. Our partners are all very different. Braskem, for instance, has great knowledge and experience in petrochemicals, and at the same time is very aggressive. The German company Evonik is strong in technology and engineering but it is not as aggressive as Braskem. Our Canadian partners, Tonalli, also have very different ways of doing things. This has been a great learning process because our culture has grown and adapted to various working styles. It has improved us drastically.

Q: Why did the company decide to develop its own IDESA Technological Development Center?

A: We created this center as a way to capture and capitalize on our different businesses. It was a great idea because we were able to see that our businesses were developing great technologies that were not being exploited. With the center, we can communicate innovations and technologies across all divisions. A company’s most important asset is its people, and they need to have the right skillsets and the vision to develop new things.

Q: What are Grupo IDESA’s main goals for the near to mid-term?

A: Fifteen years ago, we made the decision to evolve into a company that is not only present in downstream, but that also looks for opportunities in the midstream and upstream sectors. Our main investments are still in downstream but we continue to expand our activities. In the case of upstream, we will continue growing. We will also invest in our Etileno XXI project and we want to continue integrating logistics into our services, which means not only having the terminals but also the fleet to move the product from the sea to the customer’s door. We have another company called Excellence Freights that transports petrochemicals and fuel.

 

Grupo IDESA founded in 1956, is one of the largest corporate groups in Mexico and has an international reach. Its established business areas are petrochemistry, distribution, logistics and business applications.