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Carlos Koiffman Vinokur – VP Business Development Latin America, ISI Mustang Wood Group, Argentina

13.10.2016 / Energyboardroom

The VP Business Development Latin America at ISI Mustang Wood Group elaborates on the strategic relevance of Argentina within the group’s regional operations and highlights that the region at large offers significant business opportunities despite the global downturn in commodity prices.

Could you please give us an overview of IS Mustang Wood Group’s footprint in Argentina today?

Argentina has had a lack of investment into infrastructure at large for last 14 years, hence why it is one of the most attractive markets for the future; this market is in need of everything!

ISI is an Argentinian based company operating across the whole region, in 2011 it was acquired by Mustang which belongs to the Wood Group, hence the name ISI Mustang Wood Group. We are currently in the process of merging all operations into one, thereafter we will rebrand as Wood Group; operating under one name in all of the different business units. Our core competence in Argentina is pipeline automation across the entire oil and gas value chain, power generation and mining; the oil and gas segment generates 70 percent of our revenue, the power generation segment 20 percent and the mining segment 10 percent.  However, we are the vanguard of extending our operations into the power generation and renewables market, this, however, across the entire region as we identify this segment as major growth opportunity for the future of the group. As of now, we do not offer the entire Wood Group portfolio but are specialized as main automation contractor (MAC), which includes superficial control and data acquisition (SCADA) systems for pipelines for instance.

Having the overview of the region, how would you assess the significance of your Argentinian operations in the regional context?

Our largest market is undoubtedly Mexico, where we are responsible for the majority of pipeline automation work for CFE, Mexico’s main electricity company. Our second most important market is Peru, where we recently won a USD 20 million MAC contract for the implementation of our SCADA system. Bolivia, Chile and Argentina are forming the bottom of the region in terms of revenue. However, having said the former, Argentina has had a lack of investment into infrastructure at large for last 14 years, hence why it is one of the most attractive markets for the future; this market is in need of everything! We are just in the process of deploying a completely new business plan for the Argentinian market in order to drive the growth of our Argentinian affiliate. We will train and deploy a significant larger number of sales personal and specifically target the large EPC companies such as Techint, BTU and Odebrecht among many others. Furthermore, we will expand our operations in Neuquén in anticipation of the development of Vaca Muerta’s shale resources.

As Vaca Muerta seems to be on everyone’s agenda, what opportunities does the second largest shale reserve in the world offer to the Wood Group?

Frankly speaking, we expected the development of Vaca Muerta to gain momentum already three years ago. Obviously the price developments in the oil and gas industry have hindered that development and I do not expect that to change in the short term future. Vaca Muerta is most certainly a huge opportunity for us—even for the country at large— but it is also in need of time.

To what extent will the rebranding and consolidation of the businesses result in an enhanced portfolio?

It will grow extensively. I just recently attended a cross divisional meeting in Mexico, discussing cross selling opportunities in anticipation of the considerable growth of our product portfolio and the business lines we will add in the next four years.

The majority of works carried out by the Wood Group globally are brownfield projects. What type of projects do you anticipate in Argentina in the context if its government’s efforts to increase foreign direct investment into the country?

Argentina is need of adapting and rebuilding the vast majority of its energy infrastructure. Undoubtedly, there will be significant greenfield investments, nonetheless, I am confident that the works on the existing infrastructure will have priority hence why I can confidently say that the majority of business will be brownfield. In four to five years, I expect a lot of greenfield works for us in Vaca Muerta, this, however, is rather the long term future.

Some of the domestic interviewees told us, that being an Argentinian company with the local know-how and network is a significant advantage in the domestic tender system. To what extent is the global footprint of the Wood Group a double edged sword for you when competing in Argentinian tenders?

Being part of the Wood Group is a tremendous advantage! Not only in Argentina but in the regional context; the Wood Group enjoys a global reputation for its operational excellence, being part of this organization opens most of our business opportunities. Most of our clients have worked with the Wood Group somewhere else already, which means we already have a trusting relationship with the client and can tap into insights of the client’s needs who appreciates this fact. The domestic companies’ argument is, that they have the network and connections in the market; we, however, have these too in addition to the strength, know-how and reputation of one of the leading global players in the industry.

Ever since the landslide in commodity prices, the global industry is following a cost containment strategy. How has this affected your operations here in Argentina?

To be completely honest, it is undeniable that the landslide of commodity prices has hurt us as company on a global scale. On the contrast, in the Latin American region we are performing increasingly better due to the types of projects we are carrying out here. Across the region the electricity generation in a combined cycle is growing, regardless of the commodity prices and we have significant projects in this area. We anticipate a similar rise in demand in Argentina which will allow us to outperform the market. The lack of energy infrastructure, as a result of lacking infrastructure investment over the last decade, creates very different conditions contrasting the global outlook—I am confident that our Argentinian business will grow significantly!

To what extent does your global network enable you to actively transfer know-how and technology into Argentina?

Having affiliates across the globe is a significant strategic advantage for us. We are actively deploying our staff in between affiliates in order to have the right know-how at the right affiliate for the right project. Typically, every affiliate has a certain type of project it has most expertise in; if a similar project comes up in another country the know-how exchange is fluent. For instance, the Mexican affiliate is highly experienced in gas pipelines and leakover detection, our Peruvian affiliate has significant expertise in gas terminal projects and the Argentinian affiliate has significant experience in gas compression projects; these experiences are shared by using our workforce according the project rather than the country.

To what extent is it feasible to pursue all of the opportunities you are identifying in Argentina and –if not feasible— which are the opportunities you prioritize?

It is true, that one needs to target certain segments as it would be incredibly hard to outperform in all of them at the same time. In Argentina, we will be focusing strongly on the refining and petrochemical industry in the future, we recognize strong demand in this segment and are pursuing rapid development into this area. Part of this development is to develop solutions reducing the OPEX side of the business rather than the CAPEX side.

How will you be able to reduce the OPEX of your clients?

You need to provide innovative solutions and you need to have the right staff. In aforementioned cross divisional meeting, this has been a topic as well. We have collaboratively shared thoughts and ideas and all of us believe that we have the skills and capacity to meet a tremendous share of the current need in the power and energy segment. Our future—in particular in Latin America—is glistening!

In order to provide high quality products and services you need excellent staff and workforce, how would you assess the talent pool available in Argentina?

We have very talented and highly educated people in Argentina. Our formula is to launch the new kids on the block; we are closely working with the main universities in the country in order to recruit, educate and train the future staff of our group. In regional comparison, Argentina has one of the best talent pool available, in Mexico for instance, proper staffing has become a challenge.

Besides driving an aggressive sales strategy and identifying new opportunities, what are the topics keeping you most busy?

Besides aforementioned opportunities for organic growth, we are also considering a potential acquisition. On a global scale, the Wood Group has carried out some acquisitions in order to enhance technological capabilities and we identify another opportunity to do so in Argentina. I cannot disclose detailed information, nonetheless, I can reveal that as group we also consider inorganic growth and I am confident that this will lead us to success!

Argentina is currently in the spotlight of the global oil and gas community. From your perspective, why is it the right time to come to Argentina?

As mentioned before, I believe that there is a lot that needs to be done in Argentina. However, I am also confident that this is the right moment to be in this market; there are huge opportunities across different segments and we are well positioned in anticipation of a great future.



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