Graciela Álvarez Hoth, Director General, NRGI Broker • Interview

What inspired you to create NRGI Broker?

NRGI is a specialized insurance broker in the energy sector, and we are active in managing risks. I have 30 years of experience in the sector. We started working in Ciudad del Carmen, because 70% of Pemex’s budget was spent there. We have worked during five six-year administrations with Pemex, and I have been navigating risks with them for 30 years. We participated in the energy reform by the invitation of the then-Secretary of Energy, because the administration needed to understand the risks involved in oil and which guarantees they were going to add to the contracts signed in the transition toward a more open oil market, which currently has over 130 contracts. That is when I built a relationship with the federal government. We worked on the insurance regulation currently managed by the Agency for Safety, Energy, and the Environment (ASEA) and created during the energy reform to provide guarantees and manage risks ranging from deep water exploration to local gas stations.

What are the main challenges your clients face in terms of risk management?

Nowadays, we have two types of clients: clients who come from abroad and huge corporations that have already developed risk management plans; however, where it gets interesting is local contractors. Pemex has the third-largest insurance policy in the world because it covered the activities of its contractors as well. Mexico has little historical past concerning risk management, because companies are not used to having insurance for their activities. With this new government administration, the current insurance only covers Pemex's direct activities; any third party has to be responsible for its own operations. Hence, companies are obliged to know why it is necessary to have insurance, as they are required to. Any mistake could cost the owners their company.

Manuel López Obrador manages to stabilize this situation, things can improve. Shallow waters have always been a specialty of Pemex, so what they are doing now is making contracts to drill. This way, you give work to Mexican companies in an already-matured industry. Not only is it a great opportunity, but it is also a way to make companies more efficient, because you only get paid if you actually produce oil. There are many opportunities to grow our oil fields by techniques such as fracking, which is a forbidden topic right now, but there is quite a bit of evidence that shows fracking is not detrimental. In general, there are more things to explore and drill.

Can you tell us about the technology being used to make the industry more efficient?

It is not discussed publicly, on account of smaller operators competing with Pemex using technology for their operations. Actually, there is not a lot of competition in the industry; it is more “complementary” work, because it is a small sector in which everybody knows each other.

What are your growth plans both nationally and internationally?

I have a license to operate in Mexico, and there is much to do locally. Internationally, what we do is work with foreign companies to make their lives easier. We are not only good at what we do, but we also understand regulations, barriers, and opportunities. As a result, we can be their facilitators in the country. We help our clients understand the regulations in the country, and we also match their business with objectives within the industry. We started an initiative called Voices of Energy, which was inspired by our work done to clarify the confusion around the new energy reform. Voices of Energy is a communication space where I invite officials, private companies, and legislators to meet and present a topic. This initiative is a side project, but it gives us many benefits. Through it, we can understand different perspectives on the issues the industry faces. ✖

What is driving the dynamism of the retail fuel market in Mexico?

The opening of the energy market makes business radically different than before. There is continuous infrastructure development in terms of supply, product, storage capabilities, and product availability in locations where there was none before. These changes are positive, because diversifying brands and value offers is something that benefits the consumer. Initially, we saw the largest global brands entering the Mexican market, because Mexico is the sixth country in gasoline consumption and growing. There many opportunities for fuel growth in retail, which is estimated to be 2.1% annually for the next 20 years versus the reduction in global demand for fuel. Mexico is, therefore, attractive, and as a national company, we must be prepared to compete with large players entering the market.

What has been the market reaction to your app launched in 4Q2019?

Technology is fundamental to compete. We have invested around USD14 million in the last three years to update our network, which allows clients to have the same experience, whether they use our services in Nuevo León, Baja California, or Chihuahua. Clients can request invoices through our app, and soon they will be able to pay through it too. We consider the multichannel offer critical, giving the client what they want, when they want it, and how they want it through delivery. The app was launched only in Mexico, but the global brand is planning to integrate it. Mexico is wonderful because the percentage of young people is growing, which forces us to develop in line with their needs. We even have the license for Pokémon Go, making all our 7-Eleven stores in Mexico official Pokémon Go stops.

What are your goals and objectives for the rest of 2020?

million in last 3 years to update network

Plans to open new service stations by 2023