Integrated Gas Services de Mexico (IGASAMEX)
In the business world, the word “connection” carries a lot of importance. It’s essential for businesses to be connected to their customers, their vendors and their supply chains. They need to be connected to their markets and understand what’s going on in them. Sometimes, however, the meaning of “connection” can be quite literal and potentially more damaging to a business than any other interpretation.
For example, imagine if your business was not connected to the power grid, or didn’t have the infrastructure in place to connect to the phone system. In terms of access to natural gas, that’s the situation in which many businesses find themselves in Mexico.
However, Integrated Gas Services de Mexico (IGASAMEX) exists to provide these companies with the infrastructure they need, without making huge capital investments in pipelines.
CEO and Director General Luis Montgomery explains that the company came about after 1996, when the Mexican government deregulated the natural gas market and allowed for private investment in its distribution. Although many large firms began investing in pipeline infrastructure, they left many areas of the country without connections.
Montgomery says that only about half of Mexico’s 31 states and Mexico City currently have access to the nation’s natural gas pipelines. “So, we found a niche of opportunity there where we were going to provide a service,” he says.
Keeping It Flowing
IGASAMEX serves as a middleman of sorts between businesses that need natural gas for power and heating and the pipeline. Montgomery says the company builds pipelines for customers to connect to the nation’s infrastructure, and then rents out their capacity to the customers. This allows them to have access to natural gas without having to spend money on their own connection or deal with the major providers.
In fact, Montgomery explains, IGASAMEX also takes care of all paperwork for the client. If they were connecting to the open access pipelines themselves, these customers would have to negotiate the extensive permitting process without much help. “If you are producing soap, you don’t know very much about the natural gas market,” Montgomery says.
IGASAMEX’s approach has proven to be successful so far. The company has operations in 12 states in Mexico, with 48 connections to the open-access pipeline. Montgomery says the company delivers more than 28,000 BTUs of natural gas each day to more than 120 industrial customers throughout Mexico.
Expanding and Innovating
Montgomery says the biggest challenge facing IGASAMEX, as well as the rest of the natural gas market in Mexico, is the size of the country’s infrastructure. With only 27 percent of the country’s area able to connect to natural gas, it is more difficult for IGASAMEX to find potential customers. However, things are beginning to change in this regard, and IGASAMEX is one of those who are leading the way.
Montgomery says the company is promoting the use of natural gas as an energy source, advocating what he calls the “lifestyle” of using natural gas over other energy sources. By doing so, IGASAMEX hopes to push demand for natural gas higher among businesses.
Another avenue the company believes will spur growth in natural gas usage is the advent of liquefied natural gas in Mexico. IGASAMEX will soon be the first company in Mexico to liquefy natural gas inland, which will open up new markets as it will be able to transport natural gas up to 1,500 kilometers away. “That will bring us a lot of markets because this way you can reach areas where pipelines will not reach in the near future,” Montgomery says.
The liquefied natural gas initiative also will help alleviate what Montgomery calls a “chicken-and-egg” situation where providers are reluctant to expand pipelines because there is no demonstrable demand for it. By creating clusters of natural gas customers where there is no pipeline, Montgomery says, providers may be more likely to expand access to those areas.
Based on this initiative and the slow recovery of the global economy, Montgomery says he foresees continued success for IGASAMEX. Although the recession took its toll on the industrial sector, things are starting to improve.
“Overall, the main challenge that we have so far is reaching the levels of production that we had before 2008, but that is starting to happen,” Montgomery says. “We expect to grow. We’re growing the company and we’ll keep on growing.
“We are really the ones who know and understand what is going on in the natural gas industry,” he adds.