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O N L I N E

ICA FLUOR

DANIEL S. DE R.L. DE C.V. C O R P O R AT E B R O C H U R E

www.ica.com.mx


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f it had waited long enough, the US construction giant Fluor would have been able to do the business it wanted to do directly with Pemex ((Petróleos Mexicanos), the national oil and gas company of Mexico. Since the introduction of the North American Free Trade Agreement (NAFTA) the market has been opened, but 17 years ago that wasn’t the case. Any company wishing to do business with Pemex had to have a Mexican base. It’s not clear whether the joint venture that Fluor entered into with the leading Mexican construction company ICA (pronounced Ee-ka) was intended to be purely for the duration of the first construction project or not, but 17 years later it’s still going strong. By the same token, Pemex remains the single largest client that ICA Fluor services. At the latest count, 80 percent of the order book was from Pemex. In March of this year the joint venture was awarded a half share of a $622 million engineering, procurement and construction (EPC) contract for two low-sulfur gasoline projects as part of Pemex’s clean fuel program. ICA Fluor will erect and commission catalytic gasoline desulfurization plants and amine regeneration units as well as the associated utilities and offsite facilities, and then integrate them with the existing Gral. Lázaro Cárdenas del Rio Refinery in Minatitlan, Veracruz, and the Antonio Dovali Jaime Refinery located in

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It’s difficult enough for any business to stay intact in the hig competitive construction busines so when a joint venture lasts for years, it’s an achievement worth noting, as Jeff Daniel reports


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ICA Fluor Daniel, S. de R.L. de C.V.

Salina Cruz, Oaxaca. Both refinery projects are rated at 25,000 barrels per day, and the work is scheduled for completion in mid-2013. Of course, the danger of becoming too reliant on one source of work is that you are at the vagaries of both the economy and politics. Not surprisingly, then, things have been somewhat slow in the petroleum business, but there are now signs that Pemex is returning to higher levels of

activity. As well as increasing local production and refinery capacity, there is an acknowledgment that fuels need to be cleaner—hence the investments mentioned above. But there is a wider problem of declining oil reserves and how best to boost domestic oil production. Whether or not BP’s troubles in the Gulf of Mexico will cause some rethinking remains to be seen, but Mexico has started to


ICA Fluor Daniel, S. de R.L. de C.V.

Cooper Crouse-Hinds Cooper Crouse-Hinds integrates a comprehensive line of electrical and instrumentation products with expert support, industry insights and local availability to improve safety and productivity in the most demanding industrial and commercial environments worldwide. Cooper Crouse-Hinds manufactures over 100,000 products, including conduit and cable fittings; enclosures; plugs and receptacles; industrial lighting fixtures; signals and alarms; controls and electrical apparatus; commercial outlet boxes; and protection equipment for process control branded MTL Instruments Group.

EagleBurgmann Mexico EagleBurgmann Mexico has partnered with ICA to provide mechanical seals and supply systems for oil & gas extraction and related water projects, with the petrochemical industry on cryogenic plant projects and on clean fuel projects for refineries. EagleBurgmann provides a range of sealing solutions for the chemical, power, mining, food & beverage, and pulp & paper industries including dry gas seals, expansion joints, packings and gaskets.

and load-out of the wellhead recovery structures. The new offshore platforms are connected to the existing Akal production platforms. In the meantime, there are plenty of other Pemex projects in development to keep engineers and estimators busy. A cryogenic gas treatment plant is expected to be announced soon, and it is believed that extra refinery capacity is being planned through either upgrades or extensions. The work will attract plenty of overseas competition, but alongside ICA Fluor’s long track record in Mexico, the feeling is that its local base ought to ensure lower costs than any of the Spanish or US firms in the mix. Although the ICA Fluor joint venture was created with oil & gas in mind, it hasn’t felt restricted in searching out other types of construction projects. In fact, bearing in mind the cyclic nature of government contracts, such a move is little short of essential. A year or so ago, as much as 60 percent of sales were outside the oil & gas sector. When Thomson Multimedia—one of the world’s largest suppliers of large televisions—wanted to open a plant in Mexico, the $79 million contract to build the 4,000-units-per-day plant went to ICA Fluor. At the other end of the construction spectrum, the Canadian-listed Baja Mining Corp. engaged ICA Fluor to carry out capital cost estimates and a project construction schedule for a new copper-cobalt-zinc-manganese mining project located near Santa Rosalia, Baja California Sur. At the time, Baja president John Greenslade stated, “With the combined knowledge and

“ICA has forged permanent relationships with a number of French and Spanish firms with expertise in specialist areas with a view to carving a permanent niche in the market” look at deep-sea drilling. Should this proceed as anticipated, it will require expertise that is not locally available, but it could be a rich source of work for ICA Fluor. In fact, the joint venture is already involved in offshore drilling, having constructed two lightweight platforms for Pemex to drill in the Cantarell production field in the Gulf. In this instance, work was carried out in conjunction with its subsidiary Industria del Hierro and included procurement, construction, testing

efforts of this team, the project will continue to be developed in a responsible, sustainable and economic manner, ensuring that the best interests of all stakeholders and the community of Santa Rosalia continue to be served.” As commodity prices continue to improve, more and more mining activities in Mexico and neighboring countries are being taken out of mothballs and revitalized, creating EPC opportunities for ICA Fluor. In fact, it was Fluor’s in-house expertise in


ICA Fluor Daniel, S. de R.L. de C.V.

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engineering, procurement and construction that ICA knew would complement its own construction capabilities. ICA is Mexico’s largest construction company, with interests in civil and industrial construction as well as infrastructure and housing. Since its establishment in 1947, it has contributed to much of Mexico’s fabric, with clients in both the private and public sectors. In the last financial year, ICA had sales of Ps30 billion and an operating income of Ps2.4 billion— both up by a third on the previous year. Over its history, ICA has been involved with some of the major projects its neighbors have carried out. One of the most recent is a contract worth approximately US$270 million, awarded to a consortium of which ICA is part, to construct a three-kilometer section of the new Pacific Access Channel on the Panama Canal. This work, which began in 2007, is part of the overall project to widen the waterway in order to increase the capacity of the canal by adding a third set of locks, thus enabling larger vessels into what is one of the world’s most important shipping conduits. The consortium has to excavate approximately 25 million cubic meters of material, construct a 2.8km dam between the existing channel and the new channel, as well as a 1.8-km cellular cofferdam. To make the work more interesting, it will have to clear unexploded ordnance areas, as well as the more routine work of soil injections and treatments. The arrangement ICA has with Fluor has been so positive that it has become a model copied several times over. ICA has forged permanent relationships with a number of French and Spanish firms with expertise in specialist areas—geotechnical and

environmental services, for example—with a view to carving a permanent niche in the market. On other occasions, ICA has readily entered projectbased partnerships where the degree of specialist knowledge was beyond its scope. The partnership between Fluor and ICA gave Fluor a Mexican base while providing its Mexican host with valuable engineering capabilities. In an era when marriages of all kinds are under strain, the joint venture has not only lasted but expanded and strengthened. It has worked hard to transfer skills to local employees. By providing training and continuous personal improvement, the operation functions well, with practically all of the 1,600 employees being Mexican citizens, and expatriates only being brought in on very rare occasions. During the economic downturn, ICA Fluor has put a lot of effort into not only reducing costs but remaining an attractive partner to clients by increasing its value-added contributions. By taking on extra roles it has been able to weather the storm while maintaining the core of the business intact. Apart from the obvious economic advantage of helping to stave off competitive activity by having a lower cost structure, there are other side benefits. ICA Fluor has gained a reputation among the engineering community as an employer of choice, ensuring a ready supply of recruits when the need arises. Even those employees who came and went have taken enhanvced skills to the wider national arena. The care it takes with employees is demonstrated in the safety record it has. In an industry in which accidents happen all too easily even under wellmanaged conditions, ICA’s incident rate is well


ICA Fluor Daniel, S. de R.L. de C.V.

below the US average in both civil and industrial construction (virtually zero in the latter). In fact, in 2007 the cryogenic plants under its control amassed 1.2 million man-hours without disabling accidents. The durability of the ICA Fluor partnership has acquired a particular status all its own, and at cocktail parties it is often joked that ICA Fluor has lasted longer than many marriages. But the lessons learned and trust between all parties have served the joint venture well and put it in a strong position to continue successfully for many more years. www.ica.com.mx


ICA FLUOR

DANIEL S. DE R.L. DE C.V.

www.ica.com.mx


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