/
Analysis

Worldwide EPC Player Sees Mexico as Key Market

Wed, 01/21/2015 - 11:06

OHL Group is one of the largest international concession and construction groups, with a history spanning over more than 100 years. It is currently a strategic promoter of public-private projects and the sixth largest contractor in Latin America. In Mexico, OHL Group has a presence through four of its divisions: Concessions, Construction, Industrial, and Development. The Services division is just arriving to the country and is destined to become a player in the coming years.

The firm’s first project in Mexico was related to cogeneration for a private company called Cydsa. At the same time, OHL Group developed a cogeneration project for PEMEX in the Madero refinery. The company already finished the construction of Cydsa I and is now building Cydsa II, which will be a 60MW plant in Coatzacoalcos. With PEMEX, OHL Group has developed three other projects: a hydrogen plant, a pumping station, and a sulfur press. Those projects were OHL Group’s first link to the oil and gas industry, but since then the group has been involved in project management for the Los Ramones pipeline. There has been a decrease in PEMEX’s projects, given the budget availability for public construction, but OHL Group is analyzing new areas, especially in storage and delivery. There are two main reasons why OHL Group is interested in storage and distribution projects. The first one is the group’s experience in international projects, including its recent venture in Jordan, where OHL Group has been awarded the project for the ASTPP (Amman Strategic Reserve Terminal for Petroleum Products). The second is because of the new opportunities arising in Mexico.

International investment funds BlackRock and First Reserve recently bought a significant share of Los Ramones. Antonio Héctor Álvarez del Pozo, Director of Mexico and Central America for OHL Industrial Mexico, does not think this acquisition will have much impact on the development of the pipeline, since these firms are only financial partners. “In our experience, investors only want to make sure that the project is being developed correctly, without being involved in the actual operational processes. Our client in this project is TAG, a subsidiary of PEMEX, but this company is now a minority partner. This may have some repercussions, but we do not expect many changes,” he explains. “OHL Group acts as a liaison between the EPC contractor and the owners, validating the information provided and ensuring the proper development of the project. OHL Group brings a significant added value through its project management, being able to detect, at a very early stage of the project, any problem that might occur though its early alert progress system.”

Being an international player, OHL Group is able to implement international best practices in the development of Los Ramones. Álvarez del Pozo mentions that OHL Construcción has been involved in a third of all the gas pipeline projects in Spain, providing the group with a great deal of experience as developers. Apart from including people with expertise in pipeline projects, OHL Group brought two engineering Spanish companies, ICC and Gas Natural Fenosa, to bring the necessary operative, management, and engineering experience for the project. Another important area in which the company has contributed is pipe availability. “We have a lot of experience in international purchasing, and we know how much product we can obtain from different steel makers all over the world,” says Álvarez del Pozo. OHL Group receives the purchasing information from its clients and offers them solutions depending on the best way to obtain their products. OHL Group is present in 30 countries, meaning that the group can obtain the best information from its international network of suppliers. In spite of PEMEX’s budget cut, Álvarez del Pozo is confident that OHL Group’s projects are not going to suffer any changes. “PEMEX is going to restructure but it has already approved budget provisions to continue with our operations,” he clarifies.

Finding and retaining the right talent is a challenge for any company. In March 2015, OHL Group presented its 2015-2020 Strategic Plan with the commitment of doubling its turnover to €8 billion and increasing its EBITDA to €2 billion. In this strategic plan, Mexico occupies a significant position. OHL Group estimates that, by 2020, its eight home markets will concentrate 85% of its total revenues. This strategy will therefore reinforce OHL Group’s presence in these markets, namely by increasing efforts in Canada, the US, Mexico, Colombia, Peru, and Chile, while maintaining its commitment to traditional markets like Spain and Eastern Europe. Álvarez del Pozo stresses the importance of the company’s human capital in achieving this ambitious objective, which is why the 2015-2020 Strategic Plan reinforces OHL Group’s commitment to helping its people grow. OHL Group is focused on the promotion of programs to identify and manage talent and has a commitment to excellence in mobility plans and international development, technical excellence, and continuous training and promotion of ethical and cultural values and principles.