Author: Mexico English Library

$10 Billion Tula Refinery Plans Will Continue, According to Pemex CEO

Despite set backs regarding the projects proposed end date. Pemex (Mexican state oil) still plans to move forward with the $10 Billion Tula refinery project. Although the company had neglected to include the project in their five-year plan, CEO of Pemex Emilio Lozoya recently addressed the media regarding the situation.

Mexican state oil monopoly Pemex has not axed plans for a new $10 billion Tula refinery, the company’s chief executive said on Wednesday, despite having pushed back the project’s completion to an unspecified date.

The future of the new Tula Bicentenario refinery in the eastern state of Hidalgo has been the subject of debate since it was omitted from Pemex’s updated five-year business plan last month.

That led local media to suggest the long-touted project had been terminated, a charge Pemex denied but failed to bury, saying in a U.S. Securities and Exchange Commission earlier this month that it was “evaluating the nature and timing of this project.”

Speaking in the lower house of Congress on Wednesday, Pemex CEO Emilio Lozoya said the project was still going ahead. But he was not clear about when construction would end on a project announced to great fanfare in 2008.

“The new Tula refinery project remains part of Pemex’s business plan,” Lozoya said, noting that the current plan ratified the objectives of the former 2013-2017 scheme. Pemex has often said the new refinery would be completed by 2017.

However, Lozoya did not give a specific completion date. Instead, he noted that Pemex’s priorities had shifted to focus on the more profitable upgrade of the existing Tula refinery, the country’s second biggest, near the planned location for the new refinery.

“In the new execution plan, we’re prioritizing the modernization or reconfiguration” of refineries, Lozoya said. “Pemex Refining’s strategy is very clear – create value.”
The upgrade to the Tula refinery, which will cost about 4 billion pesos ($309.19 million), was necessary, Lozoya said, because Pemex’s refining unit lost close to 1 percent of Mexico’s gross domestic product each year – or some 112 billion pesos. The installation of a new coker at the existing Tula refinery, on top of similar upgrades at two other refineries, would help stem losses more quickly, Lozoya said.

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Pemex Issues US $1 Billion In Bonds

Pemex will receive one billion US dollars in guarantees from the Export-Import Bank of the United States, which will support the services of Pemex and the export of US goods.

The amount will increase through an oversubscribed option. This will be exercised through a six year fixed rate bond.

The banks involved, managing the debt issue, are Scotiabank, Banamex, Bank of America, and BBVA Bancomer.

The placement consisted of a six-year fixed rate bond and a 12-year floating bond that were twice renewed, as well as the reissue of an 11-year bond. The bonds are part of the NOC’s current year financing program.

Capital market is an innovative and proven approach that helps to provide funding for PEMEX’s purchases of American goods and services at no extra cost to the US treasury. This strategy will provide and maintain American jobs and supports American exporters in large and small businesses inside the United States. This move is beneficial for both countries.

The transaction is assisting in financing exports to Pemex of American made oil and gas field drilling services, chemicals, drilling platforms, spare parts, safety equipment, and geophysical studies.

To finance the purchases of these exports, Pemex is issuing Ex-Im bank guaranteed bonds on capital markets. A firm that will benefit directly is Checkpoint Pumps & Systems, a small firm from Louisiana. The company is a single source for engineering, testing and field service, manufacturing. It has around thirty employees at their locations around the world and seventy employees at their facility in Mandeville.
Pemex recently opened opportunities for foreign investors. Pemex had a monopoly for seventy-five years; all the operations were private. On August 11, this policy ended. Pemex is looking to start exploration in deep waters and needs the technology other oil companies have around the world. They are attracting many of the biggest oil companies to invest in Mexico now that the legislation is open and protects foreign investors.

In June, Pemex sold a record of four billion in bonds to refinance debt and fund capital expenditures. Demand was the highest for a Mexican bond issuance. Pemex sold five hundred million in five-year bonds at a yield of 4.945 percent, reopening its 2024 bond, and three billion in thirty-year bonds.

2014 was important for Pemex bonds. The overhaul of Mexico’s energy laws to allow private involvement has contributed to a great demand for the bonds. Initially, two billion was planned but it was increased to the thirty-year tranche.

Pemex is expecting to raise 14.7 billion this year in debt, loans from export credit agencies, foreign capital markets, and the Mexican peso debt market.

Pemex bonds have been crucial to this year’s plans for the company and their exploration plans for the future, attracting foreign investments and consolidating relationships with important oil companies from around the world.

Pemex To Restructure Operations With Five New Production Subsidiaries In Mexico

Pemex is restructuring their four operating units into five subsidiaries under two divisions. Pemex received approval from the Board of Directors and it is proceeding with the planned restructuring.

The new subsidiaries will focus on the following five items: logistics, services, fertilizers, ethylene and drilling. Pemex is combining their human resources, corporate functions, legal, planning, and finance departments into one central department.

These changes were made so Pemex could face the new challenges of the company’s innovative ventures and the energy revolution. These changes will allow Pemex to improve human capital and better serve the population.

The restructured company now has two operating units and five separate subsidiaries. The objective is to have a greater transparency and efficiency within the company.

Pemex has plans to capture vapor emitted during its processes to generate electricity and plans to investigate the ethylene business as a means to sell polymers. The drilling unit plans to lend drilling services as well, utilizing its competitive advantage.

The new structure does not require growth in payroll costs or the number of total jobs, Pemex has to produce tariffs, price structures and costs for commercial transactions between the company and their affiliates and subsidiaries within 120 days.

The restructuring scraps the previous divisions: exploration, refining, production, gas, petrochemicals and basic petrochemicals. These divisions have been replaced with just two: upstream and downstream; industrial transformation on one side and production and exploration in the other.

The five previously mentioned non core subsidiaries will become affiliate companies next year.

Pemex Exploration and Production is currently a standalone subsidiary that will be absorbed by Pemex to become Exploration and Production. Three of the downstream subsidiaries will unite to compose the new industrial transformation unit.

Corporate functions such as human resources, procurement, planning, and legal will be centralized.

Pemex restructuring goes hand in hand with the series of structural changes that Mexico made to promote the country’s economic growth and stability.

This new legal framework for Pemex represents a big change for the company; Pemex enjoyed monopoly status and now it will have more of a commercial profile by opening the upstream, downstream, and midstream sectors to private participation.

The new energy reform legislation creates a new concept, the concept of Productive State Corporations (PSCs). Because of this, Pemex will have now an entrepreneurial nature. It will be subject to corporate governance similar to a private entity and will be governed by commercial laws.

Pemex will now compete with third parties in the new Mexican energy sector—something that was unthinkable for more than 3 decades.

There is one thing that is certain: Mexico’s energy sector and Pemex are making huge changes for their future.

Inicia operaciones la nueva Dirección Corporativa de Procura y Abastecimiento de Pemex

​La nueva Dirección Corporativa de Procura y Abastecimiento (DCPA) inició hoy operaciones, con el propósito de establecer procesos homologados en todas las compras de bienes, servicios, obra pública y arrendamientos operativos de Petróleos Mexicanos, lo que permitirá agilizar las decisiones y generar importantes ahorros.

El director general de Pemex, Emilio Lozoya Austin, señaló que el cambio fundamental que introduce la Reforma Energética es que Petróleos Mexicanos habrá de competir en un mercado abierto.

Luego de indicar que Pemex tiene que transformarse en una empresa competitiva, a la altura de cualquiera a nivel mundial, lo que exige una transformación estructural, precisó que un paso fundamental es la nueva DCPA, cuya creación fue aprobada por el Consejo de Administración.

Lozoya indicó que al centralizar las compra, se busca atender de mejor manera las necesidades reales del negocio, a través de la planificación integral de largo plazo, y contar con una gestión integral de proveedores y contratistas confiables y competitivos.

Un primer resultado de la puesta en marcha de esta nueva manera de procesar las adquisiciones de Pemex, agregó, será un ahorro sustancial desde el primer año de operaciones de la Dirección, de entre 5 y 10 por ciento, sobre compras estimadas en alrededor de 40 mil millones de dólares al año.

“Estamos empeñados en diseñar una estructura con procedimientos competitivos, acordes con las mejores prácticas internacionales.”

Lozoya resaltó que ya se dio el primer paso al implementar el nuevo esquema de trabajo horizontal por procesos, diseñado por la Dirección Corporativa de Tecnologías de la Información y Procesos de Negocio (DCTIPN), a fin de agilizar y hacer más eficientes las labores de apoyo para elevar la productividad y la rentabilidad de las áreas sustantivas o de negocio.

Al respecto, José Luis Luna, titular de la DCTIPN, puntualizó que estos cambios forman parte de la nueva estrategia y visión institucional basada en procesos de negocio alineados con capital humano y tecnología.

En el evento, el nuevo director corporativo de Procura y Abastecimiento, Arturo Henríquez Autrey, afirmó que se deberán superar viejas prácticas y paradigmas, y construir una nueva cultura de los procesos de compras. Para hacerlo, dijo, se tiene dos retos esenciales: más eficiencia y mayor transparencia.

Asimismo, aseguró que se mejorarán los esquemas de contratación, agregando y consolidando demanda para obtener economías de escala para lograr mejores condiciones de precio y calidad en bienes, servicios y obra pública. Con ello, acotó, llevaremos las operaciones de Pemex hacia el abastecimiento estratégico a través de la gestión por categorías, práctica internacional líder en la materia.

El desarrollo de la DCPA abarca diversas fases, para asegurar en todo momento la continuidad de la operación. La meta es alcanzar la vanguardia operativa en cada uno de los procesos de Pemex, concluyó.

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Pemex Management Council Approves the Creation of the Procurement and Supply Corporate Management

Arturo Henriquez Autrey will be leading this new area.

The Board of Directors of Petróleos Mexicanos today approved the creation of the Corporate Procurement and Supply ( DCPA ), which centralize purchases related to goods, services and operating leases and public works of all Pemex, allowing better use purchasing power of the company to generate savings and develop standardized, streamlined, timely and transparent processes. This new instance will incorporate various areas that are currently part of both the Corporate Operations as the four subsidiaries of Pemex that purchase, so will not involve an increase in the workforce. Also, special meeting, the Board authorized the appointment of Arturo Henriquez Autrey as head of the new Corporate.

This change incorporates best international experiences of several companies that have moved towards centralization of supply and integration, with a focus on continuous improvement and innovation in leadership at the corporate level. Other companies have followed this model are IBM, Volkswagen, Volvo, Exxon Mobil, Statoil, Shel , Kraft Foods, Ecopetrol and Kuwait Petroleum.

This standardized scheme will be aimed at generating value, aligned to the strategic objectives of Pemex and a culture of assessment that speeds decision making and enables continuous improvement of the business model.

images (3)It will also boost competitiveness through the development of new hiring and boost productive partnership with suppliers and contractors holistically. With the new model, the DCPA conduct market research, integrated requirements and then execute the recruitment process at the request of users, unlike the previous model in which each area was responsible for acquisitions. It is intended to evolve a new philosophy of buying through strategic sourcing category management, emulating best practices and trends of international oil companies. In this sense, a plan for procurement and supply with a minimum five-year horizon will be structured in addition to annual recruitment programs which address timely needs of the company.

The strategic sourcing is the focus of the transformation, as integrated multidisciplinary teams responsible for managing the budget based on business objectives . Arturo Henriquez, head of the DCPA.

The new Corporate Director of Procurement and Supply Pemex, Arturo Henriquez Autrey, is a graduate degree in economics from Boston University and has a Masters in Business Administration from Kellogg Graduate School of Management of Northwestern University, in addition to two master’s degrees in International Relations and Communications by the University of Boston. Among other positions, as an entrepreneur has created and managed multinational logistics, marketing and real estate, and has worked in prestigious international companies such as Goldman Sachs and KPMG. He was CFO and a director of Maxim Oil and Gas Inc., and since 2012, Pemex CEO Procurement International ( PPI ) and Repsol counselor, positions he occupied to date.

Subsea Projects Offshore Mexico

FMC TechnologiesFMC Technologies, Inc. (NYSE: FTI) announced Jan. 24, 2014 that it has signed a three-year contract with Pemex Exploration and Production for the manufacture and supply of surface wellheads to support its drilling and well maintenance programs in the Gulf of Mexico. The award is expected to result in approximately $64 million in revenue to FMC Technologies if all of the equipment is ordered. The agreement provides assurance that at least 40 percent of the contractual value will be ordered by Pemex during the three-year call-off period.

FMC Technologies’ scope of supply includes surface wellheads and production trees, as well as installation and supervision services for Pemex’s operations in its Southwest Marine Region of the Gulf of Mexico. The equipment will be supplied from FMC Technologies’ operations in Mexico.

Iberdrola Wins $89m On-site Power Contract in Mexico

IberdrolaSpain’s Iberdrola Ingenieria has been selected to fulfill an $89.7m contract by state-owned oil giant Petroleos Mexicanos (Pemex) to build a line to carry steam from the Salamanca cogeneration plant to the Ingeniero Antonio M. Amor refinery in central Mexico. The contract is “a new and important step in a strategic country,” the Iberdrola unit said, referring to its first contract with Pemex.