Distributed Generation’s Role in Colombia’s Future

Drought, electricity rationing, and increasing reliance on dirty thermal power are adding to the woes of the Colombian power sector.

El Niño has caused drought and high temperatures across northern and western Colombia since early 2015. Much more potent than usual, the current version is called ‘Super El Niño’ and is likely to last up to 5 years. In 2015, 9 of Colombia’s 32 departments (provinces) were in a state of emergency due to extreme drought in 2015. In recent months, El Niño dried up parts of the Magdalena River, the country’s main waterway. Electric power generation capacity, more than 70% of which comes from hydropower, has suffered. Power generating companies like ISAGEN, EMGESA, AES, and EPM have been squeezed, with little revenue to offset large fixed costs. Climate change scientists suggest that the intensity and frequency of this phenomenon will increase.

Unplanned outages of Colombian power generation plants like EPM-operated Guatape and Celsia-operated TermoFlores, sapped 10% of the country’s power supply in March alone. Additionally, about 15% of electricity is lost in transmission, leakages, and theft. Given the impact of El Niño and anticipating further reduction in hydropower generation, the government is likely to extend the electricity rationing that happened in March 2016.Colombia experiences 1.2 power outages in a typical month, and the value lost due to these power outages is estimated to be around 1.8% of sales, according to a World Bank survey. In an already constrained power system, electricity demand is growing at 13% annually, making the problem critical to the country’s future.

Distributed Generation’s Role in Colombia’s Future

 

The government plans to add 7 GW to the national grid network by 2027. While there has been a focus on reducing reliance on hydropower since the 1990s when its contribution was over 80%, more than 20% of the upcoming capacity will come from thermal generation, which is carbon intensive.

Distributed power generation – decentralized small scale technology producing anywhere from a few kilowatts to up to 50 MW close to the end user– can help mitigate the looming power crisis. Multiple units can even cater to a “micro-grid” that is either independent of the grid or connected to it through smart net meters. Previously, distributed generators relied on synchronous generators, induction generators, and micro-turbines (which were used as power back-ups), but these are gradually being replaced by solar PV, wind, biogas, and geothermal systems. Distributed generation based on renewable technologies reduces the cost of generation, cuts transmission and distribution losses, and can make self-sufficient 5-10% of the population, which is not connected with the national grid system and receives only about 5-10 hours of power daily.

The potential for distributed power generation is considerable. Small hydropower in Colombia can potentially produce up to 150,000 GWh of power per year from multiple generation sites which are less than 20 MW each. The country has significant solar power resources, with daily average radiation of up to 6kWh/m2. According to a study by the World Bank’s Energy Sector Management Assistance Program (ESMAP), approximately 190 million m3/yr of biogas generated from coffee plantations can produce 995,000 MWh of power. And, geothermal potential has been estimated at 2,210 MW (vs. current installed capacity of only 14.4 MW).

Colombia needs to finalize and articulate its electric market legislation for the country to realize the potential of distributed generation. It was among the last of the Latin American countries to have a renewable energy law. The law passed in 2014 after two years of deliberations. Limited policy development has failed to pass a provision to allow power purchase agreements with utilities, especially the largest ones such as EPM, ISAGEN, and EMGESA. Hence there is a relatively small number of small private sector players and investors.

However, there is reason to believe that even small scale development of renewable energy is on government’s radar, given that the government woke up to clean energy development to begin with. According to the plan published by the energy and mining planning agency (Unidad de Planeación Minero Energética, or UPME), 54 MW and 50 MW of solar and geo-thermal power capacity will be installed by 2020. Tax incentives give reasons to small and medium sized enterprises to invest in small scale distributed power generation: no value added tax (16%) on capital equipment, import duty exemptions for renewable energy projects, accelerated depreciation on capital equipment (50% in the first five years).

Even though the government woke up late in addressing the regulatory omissions, it needs to take it from here in an accelerated fashion. The future of distributed power generation lies mainly with small and medium players while the large players will be struggling with optimizing the performance of grid-connected hydro and thermal projects and their transmission. Future policies must focus of power purchase agreements and feed-in-tariffs so that the distributed generation sector attracts progressively more investment capital from the private sector for faster growth.

Impact of Energy Prices on Global Supply Chain Design

Boston Strategies International’s President, David Jacoby delivered the results of BSI’s recent study “Impact of Energy Prices on Logistics & Global Supply Chains” at the New England Supply Chain Conference and Exhibition (NESCON) in Boston. NESCON is produced by APICS (The Association for Operations Management), the Council of Supply Chain Management Professionals (CSCMP)’s New England Roundtable, and The Northeast Supply Management Group of the Institute for Supply Management. The 2016 conference consisted exclusively of the top-rated All-Star speakers from the conference’s 12-year history.

For global shippers, recent dramatic changes in energy costs necessitate a review and reconfiguration of the number, type and location of distribution centers and fleet assets, since the trade-off between transportation costs and inventory holding costs has changed substantially.

energy price trend graph

BSI’s study evaluated the results of 400 scenarios using a network modeling tool to quantify the impact of recent gasoline, diesel, electricity prices, load factors and network design on total supply chain costs. The study mapped the relative impact of key cost drivers according to their impact on total supply chain cost, scaling the variables from one tenth to 10 times their current value.

network sensitivity graph to energy

While current low fuel prices have dampened the pressure to move towards green energy, progressive carriers like UPS, shippers like AT&T, and OEMs like Mercedes-Benz continue their work on alternative fuel vehicle fleets, mostly based on ethanol blends and Compressed Natural Gas (CNG).

Mr. Jacoby engaged a lively discussion on the impact of disruptive technology such as Uber, Drones, and Connected Vehicles on commercial logistics, and presented a framework for logistics planning.

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To request a complete presentation on “Impact of Energy Prices on Logistics & Global Supply Chains” please contact us or drop us an email .

A Single Cyber Attack can Cause up to over $60b Loss for the US Economy

Attacks on control systems for critical infrastructure have risen by more than 250% over the past four years in the US, as web linked communication systems have proliferated and nation-states seeking geo-political and economic supremacy added to the incidence of amateur hacking. Of all the critical infrastructures targeted, power grids have become the ripest target because most or all sectors of economy depend on them: cyber attacks on power grids can be exponentially effective by crippling vast swatches of the industrial and commercial sectors. Furthermore, the absence of power paralyzes many national security systems, making physical terrorist attacks much more effective and more likely.

The Crippling Costs and Risks of Cyber Attack in Power Generation, Transmission, and Distribution

The US power grid has recently suffered three major cyber attacks. In 2012 and 2013, Russian hackers were able to successfully send and receive encrypted commands to U.S. power generators. In 2015, unauthorized cyber hackers injected malicious software into the grid operations that allowed spying on U.S. energy companies. And also, in 2015, US law enforcement officials reported a series of cyber attacks that were attempted by ISIS targeting the U.S. power grid. 

The costs of these cyber attacks are massive. A cyber attack targeted at 50-100 generators that supply power to 15 Northeastern United States, including Washington D.C., would leave almost 93m people without electricity and cause $62 billion to $228 billion in economic losses in the first year. Damage to turbine generating power plants and metering systems would cost $1 billion to $2 billion. Loss of electricity revenue would cost the utilities $1 billion to $4 billion. And loss of revenue to electricity consuming customers of the utilities would cost $60 billion to $222 billion. If recovery takes longer than a year, these costs would multiply. This damage assessment is according to a study by the Centre for Risk Studies at the University of Cambridge.

The U.S. power system is more vulnerable than most. It was never designed for network security. Moreover, since U.S. power plants are now connected to the internet as a part of setting up advanced grid and metering infrastructure, a wide range of new attack points are now available to attackers. Finally, the US electrical grid is also a decentralized network owned by numerous local operators, and security standards vary from utility to utility. More permanent damages, such as those inflicted by the Stuxnet virus in Iran’s nuclear program, cannot be ignored.

However, attacks are taking place in other countries, too. On December 23, 2015, three Ukrainian electricity distribution companies suffered power outages due to a massive cyber attack. The attackers used BlackEnergy and Killdesk malware to disable both control and non-control system computers. The attackers simultaneously flooded the utility call centers with automated telephone calls, impacting the utilities’ ability to receive outage reports from customers and decelerating the response effort. Altogether 30 substations were disconnected for more than three hours, causing approximately 225,000 customers to lose power across various areas. BlackEnergy malware had first appeared in the Russian underground for use in distributed denial-of-service attacks. An evolved version of it, BlackEnergy3, is a distinctive tool and has only been used for cyber espionage.

Areas of Particular Vulnerability

All three segments of the power sector supply chain are vulnerable to cyber attacks:

  1. Generation: SCADA systems in power plants are vulnerable through hardcoded passwords, weak authentication solutions, firmware vulnerabilities and ladder logic. Viruses such as ‘Stuxnet’ can be used to exploit these vulnerabilities to execute cyber attack on the computerized control systems in a well-targeted manner. Some of these sophisticated malwares can cover hide its presence until well after the damage is done.
  2. Transmission: Transmission systems have been the most targeted sub-system in the power system value chain..The relays on the transmission sub-system are time sensitive, and delays of even a few milli-seconds can negatively impact the performance of power transmission. The common cyber attacks in this area include Distributed Denial of Service (D-DOS), which can cause the network and communication channels send delayed responses and cause the malfunction of the Smart Grids.
  3. Distribution: Smart meters, which are increasingly common in network infrastructure, connect to the central control or Network Operating Centre (NOC) room of the utility to transmit and receive data. Poor security implementations in the smart meters could make it possible for an unauthorized third-party to intrude the NOC. The consequence can be disastrous if the meter has the “switch off” capability. Given the scale of utilities, which for large utilities could run into millions of smart meters, security vulnerabilities in this area can lead to widespread damage.

The four most vulnerable types of attack to anticipate are: 1) Intrusion in the intelligent electronic devices through false data injection attack, making SCADA send wrong information to the control systems. This can take place at the site of power generation; 2) Attacking power system control centers (PSCC), typically called DoS (denial of service) attack which causes de-synchronization and delay in the PSCC’s ability to take optimization decisions. Power generation and transmission are most prone to these DoS type of attacks; 3) Crippling electronic AC transmission system which controls power transmission capability of the power network. Both transmission and distribution networks are exposed this type of risk. ; and 4) Use of malwares to steal power network data which could be at the generation, transmission, or distribution points, where data is continuously being stored with respectto peak loads, voltage variations etc.

Supply Chain and Procurement: The Weakest Link

The infrastructure supply chain is particularly vulnerable. Malicious components enter into the supply chain nearly two years before an attack occurs, according to the Cambridge study. Even a slight oversight in procurement could bring the whole system down. Cyber attacks at the supply chain can occur when hardware and software have been counterfeited, tainted, or compromised, resulting in failure of components as designed. Components fitted with rogue malware entering into the supply chain and eventually in the utility, compromising the security mechanisms.

For example, a malicious code could be inserted into software that compromises security or kill-switches/backdoors, enabling attackers to steal data or disable the system. Maintenance and repair activities-software upgrades or equipment services, whether done onsite or remotely, could also allow hackers to corrupt or compromise systems. These compromised components could enter the supply chain from the secondary suppliers or contractors, which are less visible to the utility operators.

Major utility companies are now becoming aware of the risks that cyber attacks pose, and are investing capital to get their systems more secure to attack. Utilities are most vulnerable to cyber threat from a third tier supplier, which has no direct connection to the utility and supplies the equipment through a third party vendor or a distribution channel.  The second tier suppliers also carry the same risk but are more visible and vetted.

What Power Companies Need to Do

Taking into account the above scenarios, the second and third tier suppliers of components and services have to be examined and assessed more strictly.

There are already a number of mandatory standards and requirements for supply chain integrity led by both vendor and government organizations such as NIST, ISO, Common Criteria, and OTTF. While these standards need to become more robust given the growing sophistication of cyber attacks, the least companies can do is to seriously adhere to the existing standards and guidelines.To begin with, the power companies must disclose all features and disable what is not required, limit user capabilities, and block all unauthorized accesses.

As a part of the supply chain cyber security risk mitigation plan of action, the next most important step is to manage procurement risk. This includes joint development of procurement process with representatives from sourcing, legal, technical, and functional subject matter experts.The vendor pre-qualification criteria and all RFPs must clearly specify compliance to vital security standards.

Given the high cyber security risk emanating from second and third tier suppliers, the power companies must make good use of third party certification and accreditation for the vendors, and must also initiate audits as well as scheduled and unannounced inspections for pre-qualified vendors.

BSI wins contract with Instituto Nacional de Ecología y Cambio Climático (INECC)

Boston Strategies International (BSI) has been engaged by a branch of the Mexican government – the Instituto Nacional de Ecología y Cambio Climático (National Institute of Ecology and Climate Change) – to study renewable energy costs and value chains. BSI will compare the costs and value added of environmentally sustainable technologies for the power generation sector (large scale solar, wind and geothermal, vs combined cycle natural gas technology) to support decision-making in environmental mitigation. The study will analyze the principal actors, elements and processes, as well as costs, value added, and barriers to entry attributable to each segment of the value chain, as inputs on energy policy formulation.

The Instituto Nacional de Ecología y Cambio Climático (INECC) produces valuable scientific and technical information on environmental issues and the training of human resources, in order to inform society, support decision making, encourage the protection of the environment, promote the sustainable use of natural resources, and support the Mexican Secretary of the Environment and Natural Resources in reading its goals. It aims to be a leader agency in applied environmental research, that develops and promotes scientific cooperation projects that contribute effectively to resolve the major environmental problems of Mexico, and support the conservation and restoration of the environment in the whole country.

Boston Strategies International is a consultancy that reduces cost of gas, oil, and power operations by up to 30% through value chain cost engineering, targeted strategic sourcing, and supply contract negotiation. BSI leverages its proprietary economic models and frameworks to advise Ministries of Finance, Ministries of Economy, Ministries of Industry, and other governmental agencies in the formulation of national and energy tax, subsidy, and investment promotion policies. Our broad experience across all aspects of industrial value chains, combined with our strength in economic analysis, provides clients with robust and trustworthy roadmaps for growth.

Please contact us for more information and services.

Next Generation Supply Chains: Huge Window of Opportunity for O&G Suppliers that Create Disruptive Decreases in Cost

The oil and gas equipment supply industry has been hit hard in recent years. While nominal prices increased by 17% between 2007 and 2015, gross profit margins have fallen by 22%, from +15% in 2007 to -7% this year. Margins grew in 2015 for the first time in six years, but are falling again this year, driven by continued low oil prices. Suppliers are accepting price reductions in order to hold onto contracts and maintain their market share, in hopes of better times ahead.

The next gen of Supply Chain

Source: Boston Strategies International

 

Over the last two years, compressors and instrumentation suppliers have fared the worst, with profits declining 40% on average. Manufacturers of pumps suffered profit declines of 10%. The profitability of manufacturers of specialty forgings and fittings for oil & gas applications has been volatile, with profit margins swinging between -20% and +23%.

 

Suppliers to the oil and gas industry can’t just sit back and think “I’ll lowball my price this year and I’ll take a loss, planning on staying in business, because next year things will get better.” That’s probably not a brilliant strategy, because if things persist to be bad over the next three or four years, you won’t be able to sustain it. BSI’s supply chain forecast shows continued rough weather for equipment suppliers until 2019, and 2022 before strong growth resumes.

 

Today there is a window of opportunity for leading companies – and I don’t mean the big companies – I mean companies that lead, the companies that pro-act, the companies that change the paradigm, that put the energy and the marketing investment in to develop breakthrough technology-service-information solutions and strategic mergers, acquisitions, or partnerships that can dramatically reduce cost. These companies will add more value on among the bid slate, will win and become embedded in the future of the next generation supply chains. And that’s really the big opportunity for everybody today and it’s the way that the whole market will adjust and recalibrate.

 

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Where is the Industrial Gases Mega-merger Trail Heading?

The global Industrial Gases industry has been dominated by about 5 major players controlling more than 70% of the market.Recently, strategic business alliances have begun to augment the already heavily consolidated market towards further market consolidation. In early 2016, the number of players shrunk to four when Air Liquide acquired Airgas. Now, Praxair and Linde are exploring possibilities to merge. If this merger is accomplished, it will further reduce the number of major players to three.

With talks of a merger in its early stages, the Praxair and Linde deal would result in a global market share of about 40% and annual sales of close to $28 billion, making it by far the world’s largest gases firm.

The resulting high market concentration from the Praxair and Linde merger could have an adverse impact on the price of industrial gases at a time when major buyers, especially in the oil & gas industry, are struggling to recover from the oil price crisis. Any further increase in market concentration will certainly have antitrust authorities scrutinizing the merger even more strictly.

While the market may exhibit distorting trends in the form of oligopoly, merger and acquisition deals are a win-win for the deal-makers. The last mega-deal was closed in May 2016, when Air Liquide acquired Airgas for $13 billion. It is estimated that the combined businesses will generate annual sales of more than $22 billion, employ approximately 68 thousand people around the world, and serve well over 3 million customers. The acquisition allows Air Liquide to expand in the U.S., the largest global market for industrial gases, and extends its customer base by more than one million. It will also benefit from the most advanced multi-channel distribution network in the U.S., including e-commerce and telesales capabilities. Air Liquide is projected to become the leader in North America, after having already clinched that spot in Europe, Middle East and Africa, and Asia-Pacific.

Regulators have already had a tough time with the Air Liquide-Airgas deal and it is likely that antitrust agencies will make decision a similar decision with respect to the possible Praxair-Linde merger.  The deal, which will create the world’s largest industrial gas company with a market value of more than $60 billion, may witness some kind of divestitures.

According to the current market distribution, Air Liquide has 29% of the U.S. industrial gas market, Praxair has 21%, Linde has 15%, and Air Products has 14%. A merger of Praxair and Linde would give the combined company 36% of the U.S. market share. In Europe, Air Liquide has 32% of the market, Linde has 30%, Air Products has 13% and Praxair has 7%.

In future, it will be interesting to observe the changes to the industrial gases market. Next in line, after the big players, are tier 2 suppliers such as the BASF, Messer Group, Matheson Trigas, GruppoSapio, and SIAD. These suppliers will need to fight harder to survive alongside the emerging giants of the industrial gases supply space and may also, in the medium to long run, build a strong regional base of customers via strategic moves such as price undercutting. This will counteract the recent market concentration, resulting in the top 5 players controlling about 55% of the market over the next three years. Implication for strategic buyers: engage second tier suppliers in competition to stimulate and accelerate the return to more balanced market conditions.

The Benefits of European Integration: Don’t Forget What We Learned Between 1957 and 1992

It’s too bad Britain can’t admit that it made a regrettable mistake, ask for forgiveness, and call for a re-vote on Brexit. Now that the country’s leadership has transitioned and the Germany and France are calling for a swift exit, the chances of a “do-over” are remote at best. The country can mitigate the damage by mirroring the EU’s economic and political policies, procedures, and standards as closely as possible.

The referendum was largely driven more by a desire for political independence, especially immigration control.  The economic arguments for leaving (freedom to establish independent trade agreements with developing countries like China, and lower overhead costs) are outweighed by the benefits of being part of a huge and harmonized global trade bloc. Exporters from developing countries like China have enough trouble trying to meet the requirements of one trading bloc; they don’t want more permutations of standards, forms, and tariff and non-tariff barriers to confuse, delay, and impede their ability and economic interest in exporting to the UK.

Yes, Brussels is bureaucratic and compliance with EU regulations comes at a cost. However, the European Economic Community’s elimination of internal customs duties, the harmonization of external trade policies, and the common currency (which Britain never adopted, to be clear) drove stock markets up 20-50% preceding the formation of the single market (European Economic Area) in 1992, the extension of the European Economic Community to the European Union, and the adoption of the Euro as a common currency. To begin dismantling the structures and institutions that were built over so many years since the 1957 Treaty of Rome signals an unfortunate and destructive mid-life crisis. The UK will be economically worse off outside the EU.

europe-brexitIn 1989, I pointed out that Europe’s impending integration (the common currency was adopted in 1992) was analogous to a corporate merger that helped to reduce transactions costs and revitalized Europe’s competitiveness. “Europe stagnated throughout the 1980s and avoided confronting what was described twenty years ago as ‘the global challenge,’” I wrote. “In order to maintain its position as one of the three poles of the world economic power, Europe’s 1992 plan finally puts a deadline on building the economic unity and competitive resilience envisaged in the 1957 Treaty of Rome.” The benefits were clear: Europe was “’selling at a premium’” on the world market. Belgian, French, and Swedish bourses…all registered increases on the order of 50%…and most other European bourses [rose] 20% or more…Europe can make this restructuring successful by reducing transactions costs, increasing synergies, and coping with stakeholder opposition…Those countries not willing to support a market-driven economy will experience strained relationships with other member countries. They may eventually opt out of the EEC, choosing protectionism rather than integration.” My article was called “Facing the Global Challenge,” European Integration and Global Competitiveness. I presented it at the International Management Symposium in St. Gallen, Switzerland in front of European political and business leaders such as Edouard Balladur (Prime Minister of France), Percy Barnevik (CEO and Chairman of Asea Brown Boveri), Allan Bloom (author of “Closing of the American Mind”), Bill Bradley (US Senator and former NBA star), Arthur Dunkel (Director General of GATT), Alfred Herrhausen (Chairman of Deutsche Bank), Romano Prodi (Prime Minister of Italy), and Franz Vranitzky (Chancellor of Austria). The countries that I suspected might opt out of the Union were the less developed ones (e.g., Greece, Spain, and Portugal), whose compliance with the fiscal conditions of membership such as debt levels and foreign currency reserves had the potential to cause hardship.

In the interest of maintaining stability of global trade and minimizing the risk of recession that could accompany further disintegration, at least the founding members and the former EFTA countries should reconfirm their commitment to economic union. 

Download “Facing the Global Challenge,” European Integration and Global Competitiveness.”

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CSSOPE 2016 – “Supply Chain Management in This Oil and Gas Depression”

Boston Strategies International’s President, David Jacoby delivered the opening keynote presentation and conducted a workshop at The 6th Conference and Exhibition – China Sourcing Summit On Petroleum & Chemical Equipment(CSSOPE) 2016, which provided a top-level overview and detailed insight into the world oil and gas market and China’s equipment supply capacity.

CSSOPE 2016 presentation

David Jacoby delivering the opening keynote presentation at CSSOPE 2016 – “Supply Chain Management in This Oil and Gas Depression”.

 In his speech David emphasized that output improvements from unconventional production are now over half of total production in the United States. Fracking and directional drilling have dramatically impacted the amount of oil and gas that can be tapped economically.

Surplus Hydrocarbons graph

These graphs give you a brief pictorial of recent developments.

Most oil & gas production firms have reduced their capital spending for 2015, by 12-33%, which has driven the abrupt decline in Drilling Equipment sales. Global E&P (upstream) spending will drop by 27% in 2016 alone. India, Asia and Australia are expected to cut spending spending by 13.5%, while Europe and Africa are expected to spend 7.2% and 13.5% less, respectively. North American E&Ps are expected to cut into their budgets even further, with a 40% decline in spending on E&P (upstream). This has put both national oil companies and international oil companies into debt.

CSSOPE 2016 Workshop

David Jacoby conducting the workshop at CSSOPE 2016

President David Jacoby in his workshop, explained that there are 3 upcoming periods of significant supply chain impact on all of the capital oil price degradation. The first is about a 3 to 4-year period of resettlement, where mostly industry will have to deal with a depressed supply chain environment, low pricing and a lot of turnover resulting in competitive dynamic restructuring on the part of suppliers.

The period of 2020-2030 looks like it will recover from a supply chain point of view on a fairly steady basis. But, then the 2030-2040 scenario will have a bit of deterioration again because of transition to renewable energies from oil.

3 periods of impact

The 3 upcoming periods of significant supply chain impact on all of the capital oil price degradation.

David concluded by highlighting that there is a window of opportunity for leading companies, the companies that pro-act and change the paradigm will be able to successfully change the perceptions in the industry more rapidly. These companies will add more value on among the bid slate, will win contracts and become embedded in the future of new supply chains.

David Jacoby at CSSOPE 2016

To request a complete report Supply Chain Management in Oil and Gas Depression” please contact us or drop us an email .

 

BSI Offers $2 Billion in Savings to Mexican Energy Projects: President Interviewed by Mexican Business Journals

 

David Jacoby

David Jacoby, President of Boston Strategies International, during his participation in the panel discussion “Hydrocarbons Infrastructure in Mexico” at the 2nd Mexico Gas Summit 2016, in San Antonio, Texas.

 

Monterrey, Mexico (April 22, 2016). – With the aim to help the Mexican government save $2 billion on the gas pipeline projects being tendered, and $8 billion on power plant construction over the next 15 years, the international consulting firm Boston Strategies International (BSI) started operations in Mexico.

“BSI is a consulting firm that compresses the lead-time and reduces the investment in major capital programs for oil, gas and power operators by up to 30% through value chain cost engineering, targeted strategic sourcing, and supply contract negotiation”, said David Jacoby BSI’s President.

The firm has worked with companies such as BP, Chevron, Gazprom, PDVSA, Total and major suppliers in Saudi Arabia and the Middle East. Boston Strategies International has offices in Saudi Arabia, Bahrain, China, Colombia, United States, India, Iraq, Nigeria, Qatar,United Kingdom, and recently in Mexico.

David Jacoby remarked that BSI could help operators, including Pemex and CFE, to increase their return on investments by 10% based on lower capital cost than competitors. “We could reduce between 13% and 30% of the investment portfolios across the range of energy projects, as we have done with other companies around the world”, he said.

The President highlighted that the firm could have advised the bidders participating in Round 1, on their bidding strategy and costs to ensure profitability and sustainable returns.

“We publish thought leadership, benchmarks, and methodologies to help these companies make good tenders and bids. But in some cases, if the oil price is too low, the deal just shouldn’t be done.”, Jacoby said.

“We focus on value chains through 14 different ways to cope with the extra capital costs, economies of scale, among other methods we have developed to over the years to reach win-win situations.”

For more information, please visit these articles in Negocios, El Norte, and Empresas Article (Mexican business journals).

Ofrecen ahorros en proyectos energéticos_Periódico Reforma, México (1)

Ofrecen ahorros en proyectos energéticos-Periódico Reforma, México by Luis Valle

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2nd Mexico Gas Summit – Expanding the distribution network

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People (right to left): Clay Bretches (President & CEO of Sendero Midstream), Eduardo Nieves (head of the Technical System Operations and Planning Office at the Natural Gas National Control Center at CENAGAS), Dora Mancera (organizer of the event from Industry Exchange LLC), David Jacoby (President of Boston Strategies International), Brandon Seale (President of Howard Energy México), Jimmy Delano (Vice President and General Manager of ATCO Mexico), Jay Applewhite and Raul Ferro (masters of ceremony from Industry Exchange LLC)

BSI’s President, David Jacoby moderated the “Hydrocarbons Infrastructure” panel discussion at the 2nd Mexico Gas Summit – The leading natural gas event for Mexico’s onshore E&P, midstream infrastructure, transportation and storage industries on April 13-14, 2016. The main opening points were that Mexico’s midstream segment has undergone significant expansion to meet natural gas needs of the nation’s growing economy.

Expanding the distribution network through ongoing projects like the Los Ramones development among others will now enable industrial hubs to flourish and local economies to grow. Further accelerating demand for natural gas is Mexico’s plan to reduce the use of fuel oil for power generation to only 10% of 2012 levels by 2017, mostly in favour of natural gas. Pipeline capacity into Mexico continues to expand. Capacity will rise in the coming years, as several companies are already making investments to advance pipeline expansions into Mexico, including Energy Transfer Partners, Sempra Energy, Kinder Morgan and Pemex.

IMG_8406

Power generation through these infrastructure projects will fundamentally increase gas demand in Mexico, and since it will take several years for the Reforms to boost Mexico’s own domestic production of oil and gas, over the coming years the nation will import natural gas from the United States.

Click on the Contact Us button below to learn more about BSI’s services in the area of midstream development and North American natural gas supply.

For more information about the event please see visit the link 2nd Mexico Gas Summit 2016.