Eduardo del Rivero
Commercial Director
View from the Top

World-Class Valves Meet Strict Downstream Requirements

Wed, 01/21/2015 - 14:46

Q: How has Walworth recently expanded its expertise in supplying valves for the downstream segment?

A: In the downstream segment, we currently supply valves to all of PEMEX’s refineries and petrochemical facilities. About five years ago, clean fuel developments were implemented in each of the six refineries. 80% of the valves for these facilities we supplied by Walworth. Taking on new business with PEMEX’s E&P division allowed us to stay strong in the national market during a time of little to no growth for the downstream segment. Since most of PEMEX’s investments have been allocated to its upstream and hydrocarbon transportation activities, our involvement has allowed us to grow exponentially over the past 12 years. Our role in PEMEX’s E&P operations is outlined by a ten-year open contract to supply all of the valves needed on offshore platforms, making Walworth the NOC’s number one provider for this purpose. Through this contract, PEMEX is able to request our valves in a very short time span in order to be used offshore during downtimes. This forced us to begin anticipating valve requests from PEMEX and to build up our valve inventory in Mexico in order to guarantee availability. As of today, our inventory in Mexico adds up to US$50 million, with valves ranging from 0.5-48in. One of the largest valves that we have manufactured in Mexico, a class 600, 48-inch expanding gate valve, was built for the El Misterio pumping station. This is the largest valve ever produced for oil and gas operations in the country and the logistical challenges of transporting such 10-meter high valves were unprecedented.

Q: When considering the inherent risks of oil and gas projects, how is Walworth able to guarantee that its products meet the strictest safety requirements?

A: Walworth will continue to enhance safety for PEMEX’s operations through in-situ testing. By implementing site acceptance tests (SATs), we are bringing added value to the table. Even though PEMEX has historically relied on factory acceptance tests (FATs), we created a specific division that would be exclusively dedicated to aftersales maintenance and to taking care of Walworth’s installed equipment. Given that most of the valves of large projects have been tailored to meet project-specific requirements, we service them through SATs to guarantee the integrity and functionality of the valves.

Q: How has Walworth fared with the increased competition within the Mexican valve industry?

A: Walworth strives to deliver the best results by taking into account three important aspects: product specifications, product approval, and local content. All of the macro-projects that will be developed as a result of the post-Reform environment represent a wide spectrum of opportunities for us as a national valve manufacturing company. Nevertheless, we have still had to deal with competition in the valve manufacturing market in Mexico. This industry was overprotected for about 13 years, where foreign manufacturers, namely Chinese companies, had to pay a fee of 125% to import their products. As a result, national valve manufacturers were able to evolve and grow under protected market conditions. As of six years ago, this tariff was removed, but it has not been easy for foreign manufacturers to introduce their product line in the country, given the strong domestic manufacturing business that was created over the course of a decade. While we have become a local player backed by global operations, our greatest advantage lies in our tailored products that compile specific requirements by our clients to deliver top-of-the-line valves for their projects’ needs.

Q: What projects will be Walworth’s main focus for 2015 and 2016?

A: While we have built up expertise in the upstream segment, our core activities still revolve around refining and petrochemical facilities. Working on the ultra-low sulfur diesel (ULSD) projects that will be carried out in PEMEX’s six refineries is among our top priorities for the coming year. These contracts have already been awarded to EPC contractors. All of the specifications and technical requirements for the valves used in these projects are met by Walworth’s product portfolio. Moreover, and to our advantage, these projects require local content levels of 25% as prescribed by the Energy Reform. Additionally, the amount of valves that will be required to successfully develop these projects is truly significant when compared to other sectors of the oil and gas industry. Furthermore, since we participated in the Etileno XXI project, we also hope to participate as the leading provider of valves for PEMEX’s new ethylene subsidiary.