Bolivia’s gas production is around 62 mcm per day
A new player
TOGY talks to Shaolin Li, regional director of Jereh Global in Bolivia, about the challenges and opportunities involved in entering the local oil and gas industry. Jereh group is the largest private corporation in the oil and gas industry in China worth USD 4 billion, and opened its first office in Bolivia in 2015.
Who are your potential clients here in the country?
YPFB [Yacimientos Petrolíferos Fiscales Bolivianos, the Bolivian NOC] and its subsidiaries such as Chaco, Andina, and Transporte, as well as international players like Repsol, Petrobras, Total, PlusPetrol BG (now Shell) and Oxy [Occidental Petroleum]. Those are the major players in this country. We are about to complete all the pre-qualification [procedures] for vendor registration in their databases. For some of the major operators, we were already invited to participate in the tender.
In that context how do you find the push for the government to develop exploration as well as midstream and downstream assets?
Bolivia has rich gas reserves and needs to produce more gas. Production is around 62 mcm [2.12 bcf] per day and still needs to be increased in the coming years. First, more gas needs to be discovered. And the country is investing a lot in exploration. Once they prove the gas reserves, they need the drilling, completion, compression, processing, transportation and the downstream utilisation.
With regards to midstream, there is going to be compression plant, processing plant and natural gas pipeline, and we want to take part in these projects.
For downstream, we are expecting the first ammonia and urea plant to be put into operation by Q1 2017, with an investment of USD 877 million. Additionally, a USD 2.3-billion propylene-polypropylene plant is being bid on now and is to be built within the next five years. There is also a small LNG plant, which is geared towards both domestic consumption and exporting LNG into countries such as Uruguay, Paraguay and Peru. There is going to be more potential in this market.
When it comes to gas, Bolivia’s biggest clients are Argentina and Brazil, which account for two-thirds of the export of all production.
How do you plan to develop your business in the current economic environment?
First, we are focusing on customers. We are a new name in Bolivia. Therefore, we need to focus on promoting ourselves in the market to our principal clients.
Second, we also need to prepare for upcoming projects by going through the pre-qualification and vendor registration [process]. The third area is that we need to closely follow up on upcoming projects. In Bolivia, everything is done through tenders. The projects enjoy financial support either from central bank or banks in the international market.
How receptive is the local industry to these new services and technologies?
In terms of implementing new technologies, the Bolivian industry is starting to open. For example, LNG has been booming in China for the past 10 years, and we are planning to bring our experience and expertise of this technology into this country, better benefiting the country and the people. We all need time to get used to new things and new ideas.
What is your greatest competitive advantage in Bolivia?
Most western companies have been developing for some 50 years or even more, but in China, the oil and gas industry start to boom in 1990s. Nevertheless, our strengths lie in good quality control, which is embedded in our management. It is a key factor for us and is the main reason for our rapid development and resilience.
The second strength is R&D. Now, 5% of Jereh’s sales revenue becomes an investment in R&D. Today, seven global R&D centres staffed with over 1,200 professional engineers are supporting Jereh’s technical innovations and long-term leadership in the industry. And with field-proven products and services, Jereh is working in 63 countries to maximise the potential of every operation.
We still need to unlock all the potential of our innovation and keep our position as a leader in the industry. For example, we are already the largest manufacturer of coiled tubing units in China. Additionally, we have 45-50% of the whole market share of fracturing units in China. We keep innovating, and we hold the position as a leader in some business lines. We want to be strong in all areas.
What are Jereh’s objectives in Bolivia and the region for 2017?
We are quite light in this market at this moment. However, we are working on a new plan because we have full confidence in Bolivia, a new but strategic market for Jereh. Now we are adjusting our strategy to become an integrated solutions provider. We would be focusing on the natural gas business in Bolivia and sparing no efforts to standing on our own feet as a new-comer company. For a few key projects involved, we hold a very advantageous position in the final competition and hopefully we could have some achievements in the first quarter of 2017.
Most of the countries in this region have been affected by the downturn in the industry, not only the southern part but also the northern region, which includes Mexico, Colombia and Venezuela. Venezuela is still our biggest market in the region. In 2013, Jereh signed a single contract for 970 units of equipment with PDVSA [Petroleos de Venezuela]. It was for USD 190 million. This is the biggest single contract for Jereh and we are still delivering after-sales services for PDVSA.
Our subsidiaries in Venezuela, Colombia, Mexico, Ecuador, Peru, Argentina, Bolivia and Brazil would help us to build a more extensive network, enabling us to go through this tough time in the industry with all our clients in the region by providing more competitive and economical solution with our reliable products and excellent services.