Feb. 1, 2015


Danilo Diego X. Moreno Oleas

Ecuador

Danilo Diego X. Moreno Oleas

General Manager of EP, FLOPEC

TBY talks to Danilo Diego X. Moreno Oleas, General Manager of EP FLOPEC on the strategic role of hydrocarbons, international expansion, and transforming Ecuador's energy matrix.

BIO

Danilo Diego X. Moreno Oleas studied business administration and economic science in Marseille and Nice, France, before going on to complete studies at the Universidad Católica del Ecuador. In addition, he earned an MBA in Business Administration with a major in Finance from the University of San Diego. Following this, he held a range of financial and managerial positions throughout the 1990s for a range of companies, including Cigna International Insurance Company, Ecuasanitas SA, and UNICEF. From 2000 to 2005, he worked as a consultant with the UN Development Programme (UNDP) and for various other public and private firms. Prior to his current position, he served as General Manager of Jardines Santa Fe in Mexico and then Cementos Chimborazo in Ecuador.

How has EP FLOPEC's role in the economy developed over the years?

EP FLOPEC has transported hydrocarbons overseas to and from Ecuador. Considering that Ecuador's key export product is petroleum, EP FLOPEC has an important role in that strategic sector. At the beginning, we ensured that the oil shipping companies fulfiled the Ecuadorean regulations by controlling the suitability and technical conditions of the vessels. Subsequently, we were granted the exclusive right to transport hydrocarbons to and from Ecuador. In the Pacific, Ecuador is the largest petroleum producer exporting mainly to the Americas, but also to Asia and Europe. EP FLOPEC has expanded over the years to keep up with Ecuadorean petroleum production, purchasing and leasing additional vessels. In accordance with our strategic planning, EP FLOPEC has taken responsibility for 100% of hydrocarbons transportation, both in terms of exports and imports, until 2017. One of the major consequences of this has been the need to grow the fleet; therefore, EP FLOPEC continues in the process of developing commercial agreements with other companies to expand the capacity and efficiency of the company. Often, our ships make the return journey to Ecuador empty, and so today to ramp up efficiency we are combining the cargoes of various companies.

How do you see the company developing looking ahead?

EP FLOPEC's main responsibility is to transport 100% of Ecuador's crude exports, as well as its imports of refined petroleum products. As new projects occur a potential market is in process to transport clean petroleum products into Ecuador. EP FLOPEC is open to participate in other sectors too, for example when the mining industry begins to expand in Ecuador, we can also transport mining products. Actually, EP FLOPEC increased its participation in the regional market, not only with Ecuadorean products, but also with those of the region. The goal is to have a strong position in that market in the coming years. Currently, we already operate mainly in Panama, the US, Chile, Peru, and Colombia. Those countries require maritime transportation in tankers, so we are looking to reach an agreement to undertake this on their behalf. We also have business with Mexico, Canada, and others, for which we have commercial relationships with a range of companies.

What are the challenges of expanding internationally?

EP FLOPEC has operated in the market for over 40 years and we provide a reliable and first class service to our customers. Our challenges are to develop commercial agreements and strategic alliances with specific companies to increase our participation, and provide an adequate price structure to our potential partners. We are focusing on new segments to attend the large petroleum companies' needs, considering an adequate portfolio with own, leased and associate vessels. Finally, we are constantly committed to keep all ships well maintained, providing experienced and well trained crews, and keeping onshore personnel with high standards of service.

Why is it important for Ecuador to have a public company playing this role?

For Ecuador, hydrocarbons constitute a strategic commodity and EP FLOPEC's role falls on the expeditious and appropriate fleet to lift the oil in a secure and timely manner. To achieve this purpose, we have a law which allows State companies to provide the maritime transportation of hydrocarbons. Many countries in the world have the same regulations restricting maritime transportation. In the US for example, they have the Jones Act, which states that only ships built and owned by US companies, can move cargo within US ports. EP FLOPEC supports the local maritime industry, hiring Ecuadorean officers and crew on board our own ships, creating extensive jobs either on board and shore, such as agency services, husbandry or on ship chandler services. In addition, by the end of this decade, Ecuador is planning to develop a modern shipyard to build new tankers. EP FLOPEC will be the first secured and important customer in a position to put future orders on about 20 aframax tankers over the five first years. We will also engage in the maintenance of current and new ships. In this way, our company will support one of the new government projects with a strong impact on the economy, creating thousands of new jobs along the commercial and production chain.

How do you see the Pacific Refinery changing EP FLOPEC's role in the economy?

The new refinery is going to change the energy matrix in Ecuador, shifting our historical trend of oil exporters and product importers to be self-producers of clean products. This refinery will create a petrochemical industry and new opportunities to operate different sizes of ships in order to transport a diverse range of products.

What role does EP FLOPEC play in Ecuador's efforts to change the productive and energy matrices?

I think there are considerable opportunities to take advantage for EP FLOPEC. First of all, we will continue transporting all hydrocarbon requirements to and from Ecuador, in accordance with the new energy matrix and effects of the Pacific Refinery. We also have the opportunity to develop the Ecuadorean maritime industry by the support in the new shipyard. We are going to invest more than $400 million in this project and we are going to put orders for about 20 Aframax tankers. As per above, we are involved in the shift to make Ecuador an industrialized country, instead of a historically agricultural country.

What is your vision for EP FLOPEC within Latin America and within Ecuador in 10 years' time?

Now we have the opportunity to expand our goals, not only attending to our domestic needs, but also to take advantage of the market and increase our participation. Our vision consists of attending to 100% of the Ecuadorean market and holding 25% of the regional market; and leading tanker transportation in the Pacific basin in the next 10 years. The expansion plan also takes into account the diversification of services, such as into some port agency, oil storage facilities, and additional logistic operational businesses along the maritime transportation chain.

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