Natural gas encourages growth in Mexican economy

What changes have you seen over this last year in the use of natural gas in the market?

Within the household market we have observed more stability than in previous years because people spent more time at home. Normal service was consolidated as a commodity within the household market. In the hospitality sector, we observed that volumes declined in hotels and restaurants compared to the household market. There was a significant decrease in consumption and it has been one of the slowest sectors to recover. In April and May 2020, the consumption of the industrial market experienced a reduction of about 30%. A recovery took place by November-December 2020, the sector returning to typical consumption volumes. Natural gas services via pipelines like ours were more valued during the lockdown compared to other options such as the propane tanks commonly used in Mexico, which imply physical contact. Due to social distancing, we launched an app that enabled our clients to pay directly without having to go to a facility or a payment center, avoiding any service interruption.

Is there enough natural gas and sufficient infrastructure in Mexico to satisfy the increase in the demand?

Mexico is linked to an area in the US that produces natural gas at highly competitive prices. We can access to this supply. However, we still have challenges to increase natural gas infrastructure in Mexico. For example, in recent decades Naturgy has contributed to the development of downstream infrastructure for some of the largest cities in the country. Despite this advancement, however, we still have challenges to get more households connected to the network and take advantage of natural gas benefits.

In what areas are your operations concentrated and what prospects do you have in the south of the country?

Currently, our focus is Monterrey and Mexico City. We have almost 600,000 customers in Mexico City and 800,000 in Monterrey. In the latter, there is what we call a culture of natural gas, meaning people are used to being connected to the network, in contrast to other areas of the country where the use of tanks is common. Meanwhile, in Mexico City there is a growing understanding of the benefits of having distribution via natural gas pipeline. Therefore, there is still large potential in both cities. Some years ago, we launched a plan to develop downstream infrastructure for some cities in southern Mexico. However, we depend on the availability of midstream infrastructure that it is still pending in the region. Additionally, due to the advancement of renewables, a lot of markets could focus on those energies instead of natural gas. Therefore, we are looking into different options for the future in this area, in order to promote economic growth and wellness.

How are you supporting industrial companies in the country?

Natural gas has been a key driver for economic growth. For several years, Mexican states with access to natural gas had a higher GDP than states without this infrastructure. In addition to the economic benefits of natural gas, we need to look beyond in terms of the design of energy supply for companies. Understanding the current needs of companies to optimize their investments in energy infrastructure, Naturgy has evolved from being a natural gas provider to an energy solutions company. We no longer approach industrial or commercial customers with the sole purpose of bringing them competitive energy; we want to partner with them to manage energy throughout the entire manufacturing process. We are focusing on providing added value to the industry via energy solutions contracts with a group of experts and partners that help us not only supply gas, but also to design and implement solutions to optimize investments and reduce total energy costs.

What is your view of national production in comparison to imports?

It is important to maintain equilibrium and to understand that extraction requires large investments. At the present we are facing competitive pricing for imported natural gas, which represents a competitive advantage. We have to be careful to not become completely dependent on imports.

What are the biggest projects you are developing in the country?

We are currently developing a distribution system to build local networks across Mexico City. Another project we are working on is related to public transportation. Using natural gas for transport vehicles is a great and sustainable business opportunity in Monterrey and Mexico City. The use of natural gas is not only environmentally conscious, but also a more competitive alternative. Authorities are already aware of its potential. In terms of industrial transformation, we are involved in Industry 4.0 via the provision of natural gas for key operations. For example, we are about to start supplying natural gas to what will be the most important cellphone data center in Latin America. In the coming months, we are not only focusing on customer service, but also strengthening our company identity. We have come up with an extremely ambitious plan in terms of digital transformation. Our projects are focused on enhancing the potential of energy solutions, supporting the transformation of mobility in cities and industrial development with access to gas, as well as simplifying our clients’ daily lives.

What is your vision for this year?

2021 will allow us to reach some of our milestones in terms of transformation. We are transforming our service into a streamlined digital service that enables us to be closer to our clients. Additionally, we want to be part of the economic recovery of our clients by providing energy solutions for their businesses, helping them to advance toward their goals. Meanwhile, we are transforming our company for our workforce and we want to continue being a safe and positive company for our people and their families.