“We believe there are positive outcomes for both countries, but especially for the U.S. gas producers and the end-users in Mexico.”
Energy markets in Mexico had been deregulated for the past four years and the implementation of an open market has been slow and with a lot of uncertainties. Natural gas plays a crucial role in Mexico’s total energy consumption, however, with the recent opening of the natural gas Mexican market there are numerous challenges. Santa Fe Gas is uniquely positioned to address these pain points since they have experience in both the U.S. and Mexico, and a strong position to import Waha / Permian gas, which allows Santa Fe Gas offer value-added solutions to their customers based on reliability, quality, and competitive pricing. Santa Fe Gas was formed in the year 2016 to source gas from Texas to Mexico. After Mexico’s Energy Deregulation act, in which third parties other than state-owned companies were allowed to procure and sell gas in Mexico, it made sense to participate in a market where there was declining national gas production and a growing production in the U.S. “We believe there are positive outcomes for both countries, but specially for the U.S. gas producers and the end-users in Mexico,” says Santiago Garcia, CEO of Santa Fe Gas.
An ardent tennis player and fan, Santiago tries to implement similar traits adopted from the game of tennis into leading his company. Taking a cue from the big three of Tennis—Roger Federer, Rafael Nadal, and Novak Djokovic— Santiago believes no matter the situation, one needs to be well prepared and never complacent. “Enjoy the challenge, persevere and be resilient; believe in ourselves and try to win the match, win the customer and win that contract; invest in ourselves continuously, and finally; always be courteous, respectful and professional, business and tennis are gentlemen’s activities,” explains Santiago.
Win-win Approach
With increasing commercial and geopolitical tensions worldwide and amongst North American countries, Santa Fe Gas is showing and setting an example on how they can work together, yield benefits to all parties making a win-win approach and value propositions. The energy industry integration between the U.S. and Mexico can set the standard and an example to make North America the world’s most important energy corridor by exploiting the energy potential within the region; by developing clean energy solutions, both countries have a great opportunity to achieve the ideal energy mix, while being environmentally conscious, and maximize the economic synergies that the US and Mexico can achieve.
Santa Fe Gas has culminated into a leader in the natural gas arena offering an integrated range of energy services in the United States and Mexico. Certainly, the road has not been an easy one; “at the beginning, we were uncertain on how the market was going to react to a newly established player, given we were competing against established market participants, such as BP or Tenaska,” says Santiago. “However, we always believed that our value proposition truly made sense for both, Texas gas producers and Mexican end-users.” With this in mind, Santa Fe Gas has been aggressive to position itself as a market participant in the Fermaca corridor, located in the central part of Mexico, where gas availability is new, and it opens opportunities for heavy industry activity thus economic development.
A Portfolio of Services
As mentioned above, imported Texas gas is of very high quality and a reliable source of energy for Mexico, where on the contrary there has been a decreasing natural gas production, with quality issues that affect industrial end-users. With this in mind, Santa Fe Gas is able to offer competitive gas prices from Waha, which is one of the world’s most competitive natural gas basins; all this together has become a very attractive value proposition for their customers. Santa Fe offers a portfolio of services covering strategic activities in order to let the customer focus on their core competencies. From a wide range of services from gas purchase/sales to Asset Management Agreements, Santa Fe Gas adapts the services proposal for each customer, depending on its particular needs.
In an instance, Santa Fe Gas opened a new office in Guadalajara, Jalisco, on the West part of Mexico, and the third most important region in Mexico in terms of industry activity and GDP contribution. Historically, Guadalajara has had many limitations in terms of natural gas access because it is located on the opposite side of the country where gas is produced and/or imported. Frequent gas supply cuts have been the norm for the past 10+ years, limiting Western Mexico’ potential and economic growth. With the new natural gas pipelines recently built, Santa Fe Gas has become a very important source of competitiveness for the region, offering competitive and reliable natural gas. There has been an impressive response from industrials and Santa Fe Gas is playing a leading role in the transformation of the Guadalajara industry hub (and Western Mexico), and Guadalajara just became, for the first time, the second-largest GDP contributor in the country.
Towards the Future
One of the key differentiating factors of success for Santa Fe Gas is the access to Waha gas, which is much more competitive than South Texas / Gulf of Mexico gas. The market dynamics on the Waha / Permian area around oil production helps to deliver natural gas to Mexico at competitive prices, while on the Gulf Coast there has been a lot of activity to export LNG to international markets.
Another key factor is the relationships built by Santa Fe Gas’s human capital with gas producers in the U.S. and with natural gas end-users in Mexico, understanding market dynamics and matching needs of both interest groups. Altogether, Santa Fe Gas is now positioned in a developing natural gas market along Fermaca pipelines in Mexico, offering a compelling value proposition through experienced professionals.
With the Fermaca system full operation in sight, Santa Fe Gas will work to bring more gas to Guadalajara, Central Mexico, and Bajio areas. Among other things, participation in big industrial projects like fertilizing and/or petrochemical is part of the prospected growth of the company. The company aims to become the number one private gas marketer in Mexico by 2020.
