– Primo Luis Velasco Paz, Sub-Director of Distribution and Marketing – Mexico
Pemex‘s sub-director of distribution and marketing introduces the state-giant’s inaugural Congress and International Exhibition on Hydrocarbon Flow and Quality Measurement and discusses the importance of enhancing accuracy with which Pemex collects and defines measuring points throughout the organization’s value chain.
Could you please begin by introducing yourself to our international readers, highlighting your areas of responsibility within Pemex and as Executive President of the first International Exhibition on Hydrocarbon Flow and Quality Measurement 2014?
As sub-director of Petróleos Mexicanos’s (Pemex) Distribution and Marketing subdivision, my primary tasks are essentially centered on the management of hydrocarbon products that we receive from the production sub-direction (Pemex Exploration and Production) and effectively distributing these to either our internal customers, such as Pemex Refining, or to external customers through Pemex’s PMI, the area responsible for doing business in international crude oil, petroleum products and petrochemicals markets.
Simultaneously, I am also honored to serve as the Executive President of the 1st Congress and International Exhibition on Hydrocarbon Flow and Quality Measurement, an event organized by Pemex Exploration and Production which will be held from the 12th to the 14th of November. My areas of responsibility there involve the coordination and execution of all the planned activities. it is important to remember that this is the first time Pemex holds a congress with this type of focus, our main goal is to ensure that the event is as successful as possible for all parties involved. Nowadays, measurement has become a critically important subject area, on par with the Mexico’s newly implemented Energy Reforms and secondary laws which were approved last August. As such, we have invested many efforts into the organization of this upcoming event and we are confident that it will meet, if not surpass, the expectations of all attendees. The upcoming congress will be highly technical in nature and of great importance due to the broad developments re-shaping Mexico’s energy landscape and its future. For any industry, the collection of accurate and timely measurements has always been an integral part of operations, particularly in the oil industry. For this reason, we are eager to welcome all new and existing players in the sector to participate in this upcoming event that is sure to expose a significant degree of opportunities for all.
Before turning our attention to the congress, can you shed some light on how the energy reforms have reshaped Pemex’s marketing and distribution activities?
The energy reforms have flung open the windows of opportunity for every participant across Mexico’s energy value chain, particularly for Pemex internally and externally. As a ‘productive state entity’, we stand to benefit immensely in terms of efficiency and productivity through a new capacity to form partnerships with leading companies from across the world. With regards to Pemex Marketing and Distribution, we are particularly focused now on enhancing the accuracy with which we collect and define measuring points throughout the entirety of the organization’s value chain.
Measurement activities have long applied at Pemex for several decades ever since we began exploitation and production activities. This is one of many areas we have been constantly improving in both in concept and practice, year by year. We have consistently introduced appropriate technologies and have trained our people in their use. As we continue to develop this area, we are creating a measurement master plan that is intended to enhance its accuracy and management. This is of the utmost importance because measurement is essentially the cash register of Pemex’s revenue streams.
Besides that, because of the vast depth and scope of the energy reforms, it still remains to be seen exactly how the marketing and distribution arm will evolve but it is certainly a topic we are assessing with great care. Nevertheless, we are prepared to do our part and continue contributing to the growth and development of one of Mexico’s most prestigious organizations.
Turning our attention to the 2014 Exhibition on Hydrocarbon Flow and Quality Measurement, what goals is Pemex looking to attain by organizing this event?
Primarily, we intend to convey to both Pemex and businesses operating in that domain that we have hit the ground running and are prepared to make the necessary changes and investments to enhance our measurement accuracy and effectiveness made possible by the recently introduced secondary laws.
Furthermore, we are looking to promote greater technological exchange among all businesses and attendees, in addition to Pemex’s own employees, in order to raise awareness about the latest technologies and solutions. The topic of measurements and their implementation in Mexico is taking on an even greater importance in the domestic industry, particularly as a result of the energy reforms. Mexico’s congress has made clear their objective to intensify technological exchange in the industry and this is precisely what the exhibition is about.
Villahermosa, the capital and largest city of the Mexican state of Tabasco, was chosen as the host place for this event give its strategic importance for the oil industry. It encompasses an area with significant exploration and production opportunities, particularly in the offshore. Tabasco is also a major trading hub from where well over 50 percent of the country’s production is exported.
Could you tell us more about the quantification of the volume of hydrocarbons assessment and its quality in the different scenarios of the Mexican oil sector?
Regarding the quantification and use of hydrocarbons assessment, measurements play an important role. Pemex’s exploration & production unit is fully prepared to implement more accurate measurements in the transfer points with our internal and external customers. These measurements are done with certified equipment and state of the art technology. To understand this better, it is worth highlighting that we operate under a ‘Management Plan’ of measuring systems. This ensures our clients with the confidence that the measurements we are carrying out fall within, without exceeding, international guidelines.
We are also working exhaustively on issues related to quality. For our external clients, we have established parameters of 0.5 percent water content. Nevertheless, it is complicated to provide this same quality to Pemex Refinación, which is our internal costumer. We are therefore continuing to develop our facilities in order to set up the correct mechanical systems to be able to deliver the same levels of quality throughout the entire value chain, internally and externally.
In summary, Pemex is today delivering to its client’s accurate volumes of products whose quality standards are consistently monitored to ensure they fall within acceptable control levels.
The energy industry is a global industry and it is always changing. How have Pemex’s trade patterns changed over the recent past and where do you see them going?
Indeed, in light of constantly evolving trade patterns and demand conditions, we have made efforts to diversify our portfolio of customers in the recent past. In 2013, the USA and Mexico’s Gulf region were the biggest consumers of Mexican hydrocarbons. In a commercial strategy, it is no convenient to focus 60– 80% of your product on just one client; we have to diversify our portfolio to mitigate our risk exposure to changing demand patterns and market environments. With that in mind, we decided to diversify the market and are currently reopening exports through the Pacific, through the Salina Cruz seaport, delivering shipments to destinations such as Japan and India. In doing so, we have successfully allocated our product to different geographies at more favorable prices.
Of course, a significant driver of the changing trade patterns for Mexican oil has been the impressive success the US has experienced in exploiting its shale resources. Of course, the US has for long been a major oil consumer of Mexican oil, but their revolution has dramatically altered that landscape. As a result, we are required to re-allocate a significant proportion of the crude oil to the afore mentioned countries. Nevertheless, because the USA produce light crude oil, we expect to maintain a healthy trade relationship with our northern neighbors that will still need to access the heavy crude oil that Mexico produces. As is, our current levels of heavy and extra heavy crude oil production are enough to satisfy this demand. More specifically, the international supply of our heavy and extra heavy oils outside of the Mexican Gulf, include the USA, the Middle East and Europe while our light crude oils have recently been destined through the Pacific to destinations like China, India and Japan.
What advice would you provide to international investors looking to leverage the emerging opportunities characterizing the Mexican oil industry?
The recently implemented energy reforms are undoubtedly creating a wealth of opportunities for all players in the industry, from operators and integrated service providers, to equipment providers alike. I am particularly excited to be a part of the impending economic boom, driven in part by the energy reforms, and the transformation of Mexico’s oil economy. I hope that in the same we have identified these vast opportunities, so do the international investors from across the world. The energy reforms represent the last significant and exciting hydrocarbon frontiers to open up and we hope that domestic and foreign investors seize these opportunities. Everyone at Pemex is eager to welcome everyone interested in participating in the revitalization of Mexico’s hydrocarbons sector.