How has GDI continued to diversify its portfolio?
2019 was the year we decided to diversify both in terms of our typical business lines and countries. Before, we were known for pipeline construction and mining work, but now we have decided to diversify into the complete midstream segment, especially in storage terminal construction as EPC contractors. Now we design, procure, and construct projects for storage terminals. We finished the Veracruz hydrocarbons terminal, and we have decided to enter additional international markets. One market was Europe, and the other was Nicaragua in the mining division for a small quarry private client. In Europe, we looked at a 15 river crossings for a gas pipeline in Serbia, which required a lot more collaboration.
What are your next steps when it comes to international expansion?
We are evaluating Canada and Texas for oil and gas. In mining, 2020 will be a year of execution. Now that we are in Europe, we have to see if it is worth staying there. To be honest, we are forecasting that Saudi Aramco, thanks to its IPO, will require a lot of infrastructure, and Saudi Arabia is going to be the next place to look at for midstream projects. The world has become a globalized economy, even though people are closing doors. If you keep waiting for a country to give you work, there is no chance to grow. As Mexicans, we need to get rid of the mentality of waiting for work. We should try to export our talent and see what we can do somewhere else.
Is expansion one of your main goals for 2020?
For the moment, yes. We are building a storage terminal in Manzanillo for the private sector. The challenge is that it requires a lot of offshore work and a landfill connection between land and sea. The installation of the terminal, both connecting it and installing it, has become a huge challenge and it will make 2020 busy. It is a new challenge in Mexico to export or import hydrocarbons, and this kind of technical work must pay close attention to safety and environmental policy as well as quality. With that, there are specific alliances with other offshore companies currently working.
What are the most important characteristics your are looking for when it comes to international partnerships?
We are looking for a local partner who can help us grow fast and with whom we can complement the construction of pipelines or storage terminals. We have identified certain companies in Texas and Calgary. With that in mind, we are trying to see if there is a cultural match. When you arrive in another country, it is about matching the culture and wanting to get things done. As long as we find the right partner, we will be happy to continue working.
How do you ensure success in GDI's international ventures?
The mentality of staying in one's own country, seeing what happens, and growing with the country is not enough. If you want to grow and if you want to go far, the world is your oyster. It is the reality of globalization. The project in Europe is a small project around USD15 million. The one in Nicaragua is around USD28 million. However, these types of projects give us a chance to understand the country and how things work. Once we visualize the project, we can start thinking about how to mobilize resources. The first step is knowing how to collaborate far from home. For me, mobilization simply involves technical practices that need to be performed. Mexico is a huge country; going from the south of the country to north is like going from France to Portugal. We do not know yet if there is a market in Europe. The economy there has kind of stagnated like Mexico. Other countries like Saudi Arabia and Canada are growing, especially in gas, and I'm interested in this growth.
What are the main areas of opportunities you have identified within the global energy transition?
The world is going through an energy transition and the growth of gas is just a tiny variable. Now we are going through a generational change. MIT produced an interesting tool that allows you to understand that this energy transition is an 80-year process. Even with taxes on coal and oil and subsidized renewables in the simulation, this tool shows you that this is not enough to achieve the requirements of the Paris Agreement. As GDI, we want to follow the transition accordingly by focusing first on oil and gas and then transitioning to other infrastructure. Diversifying is about planting seed-by-seed and watching how they grow.
Do you plan to diversify into renewable energy in the future?
I would love to, but in the short term, it is not possible. Energy depends not just on what you want; it depends on the political context you are in. In the US, Mexico, and Canada, it is gas. The fact is, adaptability is the highest standard you can have in this dynamic world: Continue moving, think fast, and start thinking about whatever you are going to do next. We noticed that even though we are excellent at what we do, we needed to diversify toward other markets. We also need to look at different industries. We are thinking more strategically about what to do, what not to do, where to go, and where not to go. The world is going through a lot of compliance and digitalization. Everyone wants to know what you are doing, which has made things interesting.