Treasure in Tamaulipas

• On Tamaulipas’ hydrocarbons potential: “The state of Tamaulipas is number one in associated gas reserves and number one or two in wind capacity in Mexico. One-third of all blocks to be granted in all the bidding rounds are offshore Tamaulipas. Therefore, one of the big challenges for us is to bring productivity here and have manufacturing take place in Tamaulipas.”

• On key elements for the state’s success: “Local content is probably the biggest challenge for us because that will give us the workforce, security and confidence the state needs, as well as the know-how to capture the potential of this industry.”

Fusco also discussed recent infrastructure developments in Mexico, the market for foreign investment and the challenges of building local capacity in the oil and gas industry. Most TOGY interviews are published exclusively on our business intelligence platform TOGYiN, but you can find the full interview with Andrés A. Fusco Clynes below.

What are the main priorities of the Energy Commission of Tamaulipas?
Basically, we have two priorities according to the demands of Tamaulipas. One is renewables, since Tamaulipas has huge potential for wind power.
The other priority involves building the Port of Matamoros. Tamaulipas, along with Veracruz, will be the only entity in Mexico to have three ports, with Matamoros counting as the third. Matamoros will also be a state port, not one that belongs to the national government. We are developing the port to provide services to the companies that were granted blocks in the December 2016 deepwater bidding round. We have to be on schedule to provide all these services to the companies that are working in this area.

What is being done for the port’s infrastructure?
We know that the government has no money, both at the national and state level. This is something we still lack in 2017. Despite this, there is a measure that the government is implementing in Mexico: We are going to tender the operation of the port and whoever offers the best terms, both legally and financially, to the government of Tamaulipas and has the capacity to operate a port that will provide services to some of the most important oil and gas companies in the world, will be the winner of this tender.
The legal process we are working on involves a tender to associate a private company with the government of Tamaulipas. We are going to visit Scandinavian ports so we can apply their processes in Tamaulipas. Some of the biggest companies in the world will come here.
There will be a lot of legal structuring, since this will be the first specialised offshore terminal in the history of Mexico. Previously, companies that operated offshore ports, such as Pemex, did so in a private manner. However, for the first time in Mexico, this will be public. In the past few months of 2017, we should be awarding this contract.

How will you ensure that there is enough infrastructure in place to service offshore activities?
A lot of the mid-sized companies that are targeting the oil and gas industry lack information. They lack security assessments and so on.
We have been knocking on embassy doors in the UK, Norway and Canada to provide a cluster that will bring together local companies. At the same time, the cluster will also provide access to human resources that will help us promote these companies and connect technicians in Tamaulipas that are currently in universities. Right now, we have a lot of lawyers and engineers that are studying at universities, but who are not targeting the investments that are arriving in Tamaulipas.
We plan to use the cluster to connect the local companies with the universities in Tamaulipas to encourage students to graduate and work in the oil and gas or renewables industry. We need to start providing local technicians, in order for these companies to provide work to young, local professionals.

What role will foreign and local companies play in offshore developments?
Under the energy reform, companies that want to service Mexico’s offshore platforms should be Mexican. The US has a special act that ensures that it only has US-flagged, US-staffed vessels. In reciprocity, whenever anyone provides services to a platform offshore, it shall be a Mexican-flagged, Mexican-staffed vessel.
There is also a Customs law that will increase competition for foreigners. This is something we have been clear on and will not stop: Matamoros will give preference to locals over foreigners. We shall push and convince the national government that this is a matter of national security. This is how the US does it. Whenever we have US ships in our country, this will be a national security issue. This is something Mexico will adopt.

What are the biggest opportunities and challenges for Tamaulipas in the coming years?
Mexico has the biggest wind power farms in Latin America. The Energy Regulatory Commission has to develop a productive strategy. The companies associated with wind farms need to invest and manufacture in Tamaulipas. This is something we are pushing on a daily basis. We are talking to Pemex, Siemens and others about this objective.
I don’t think that it is safe for a state to announce huge projects and have manufacturing coming from China or the US. The state of Tamaulipas is number one in associated gas reserves and number one or two in wind capacity in Mexico. One-third of all blocks to be granted in all the bidding rounds are offshore Tamaulipas. Therefore, one of the big challenges for us is to bring productivity here and have manufacturing take place in Tamaulipas.
Another challenge is obtaining investment for projects. Big companies are investing in Tamaulipas, but this is related to productivity. We want to have all the pieces done and installed in Tamaulipas, either in the north, near Texas, or the south where we have two ports. This is how we see both renewables and oil and gas, and also investment in projects and local content here. Local content is probably the biggest challenge for us because that will give us the workforce, security and confidence the state needs, as well as the know-how to capture the potential of this industry.

What is your message for investors interested in Tamaulipas?
We call Tamaulipas the energy entity of excellence because we have renewables, in addition to onshore and offshore oil and gas reserves. We also have two ports, with one more under construction, and we are the only state in Mexico that has five international airports. We also border Texas. This is the place to invest in both the renewables and oil and gas sectors.
In terms of security, we are also working with the national forces, installing them in strategic places around our projects. Investors can come and see the country’s biggest wind farms. They can look at our ports, railroads and highways.
In July 2017, E&P bidding rounds 2.2 and 2.3 will be take place and all these blocks will be awarded. Recently, we had the Sur de Texas-Tuxpan pipeline [awarded]. The biggest companies around the world are investing in Tamaulipas.

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