January 11 2016 0comment

IHI E&C Opens New Chapter on Salina Cruz Refinery in Mexico

With an important new decision just reached within PEMEX to continue into the EPC (Engineering, Procurement, Construction) phase for environmental upgrades of the Salina Cruz refinery, the IHI E&C/CONIP joint venture is taking another step together and building on a successful five year history. 

This joint venture partnership has built a solid relationship as partners while executing the Project Management Contractor (PMC) role to PEMEX for the direct supervision of basic engineering design by the licensors of the PEMEX Ultra-Low Sulfur Diesel (ULSD) program at five Mexican refineries.  

Focused on its Ultra-Low Sulfur Diesel program, PEMEX has now made a historical change in in its contracting methodology, and moved from requiring competitive lump sum bidding from its contractors to open book conversion methodology to a lump sum. 

IHI E&C communication to PEMEX about its lump sum conversion capabilities has “played a significant role in the change of contracting methodology,” said Senior Vice President – Business Development Hal Bouknight.

Based on the historical track record, the IHI E&C/CONIP joint venture team earlier were selected as the key PMC partner for PEMEX on the Salina Cruz refinery through a third party (A.T. Kearney) evaluation process of more than 25 potential PMC contractors.  Working together, IHI E&C brought the open book conversion methodology, and CONIP a highly capable local engineering team and strong track record working for PEMEX to the mix.   

As a result, IHI E&C/CONIP were evaluated as Numero Uno in capabilities to support PEMEX in this program. 

“As the first phase of work, guiding the EPC contractor through the lump sum conversion process, nears completion for our team, we are shifting to a new phase,” said Project Director Juan Velasco.  “We proceed as PEMEX’s right hand for project management, providing technical expertise for the EPC phase of this project,” he said.  With the successful conversion of the project to lump sum, AMEC Foster Wheeler continues as the EPC contractor.

“This is an important step in the progress and development of our business in Mexico,” said Bouknight. “It demonstrates our success, and reflects our focus on continuing to support PEMEX as a PMC contractor.  And it reinforces our focus on CONIP as a very specialized and experienced Mexican partner.” 

The team will now transition into the EPC phase of the project.  IHI E&C/CONIP is responsible for managing on behalf of PEMEX, and providing technical support to “help PEMEX in all office and field activities through completion and start-up of the upgrades at the refinery. This will include completion of detailed engineering, procurement, construction and commissioning – all the way to start up,” Velasco said. 

As a result of its performance in support of PEMEX, the IHI E&C/CONIP team is now being considered for other critical PMC roles for PEMEX as the national energy company embarks on several programs to bring their refineries into compliance with environmental regulations and expand the capabilities of the refineries to produce fuels for the Mexican economy.

Over the next three years, IHI E&C/CONIP PMC and EPC activities on the ULSD project will emanate from a number of locations and engineering design centers, including Monterrey, Mexico; Madrid; Thailand; Houston; and Mexico City, all in support of the Salina Cruz field location.

Main offices for the IHI E&C/CONIP team will remain in Mexico City in close proximity to the PEMEX management team.

Salina Cruz is a 290,000 bpd refinery commissioned in 1980 on the Oaxaca State’s Pacific Coast.