Stepping stones
Gas infrastructure and hydrocarbon storage terminals have been frequently highlighted as one of the main areas of opportunity in the Mexican energy market, partly due to the bidding rounds that continue to be placed on hold and the renewable energy market being held under scrutiny by the current administration.
Mexico does not produce its own gas and thus relies heavily on imported natural gas from the US. As to why the country has not invested in gas, Warren Levy, CEO of Jaguar EP, explained to The Business Year that PEMEX has long needed to focus its energies on the areas that are the most profitable in the short term, especially given the financial pressure it has been under over the last decade. Gas projects have the drawback of requiring large-scale sized investments to be profitable and a long-term life cycle. Yet, Jaguar EP is up to the challenge and sees huge potential in the market. “When we started to look at developments in Mexico’s natural gas industry, we realized there was a massive shift of focus and attention being placed on natural gas in Mexico,” shared Levy. “All we needed to do was be competent and efficient enough to displace imported gas from the US, so it seemed like a great opportunity to look at the whole cycle,” he added.
When it comes to hydrocarbons storage terminals, The Business Year spoke to Valero Mexico, the principal client of eight different projects that are being developed in Veracruz, Puebla, and near Mexico City. “We look to contribute to the reliability of fuel supply and storage capacity with a robust logistics system in Mexico for our distributors and consumers,” said Carlos Garcia, Vice President and Mexico Country Manager at Valero. “While today we bring products in via rail directly from our refineries in Texas, we will move that supply chain now through the Port of Veracruz, which will become the entry point for several terminals being developed, two by IEnova in Puebla and the State of Mexico, a third one in Guadalajara that currently has a transloading operation and will have storage capacity in the near future, and a fourth terminal in Aguascalientes that will come online in late 2022.”
Players are also taking strides to transition toward greener portfolios in response to the changes in the oil and gas market. “We see the entry of new technologies that will replace the hydrocarbons industry,” said Angélica Ruiz, Senior Vice President Latin America & Head of Country Mexico at BP. “As a result, all our projections through 2050 is that oil will decline, while gas will be a transitory kind of fuel,” she continued. Accordingly, BP has 30-year transition plan to move most of its investments toward renewable energy projects.