Sept. 20, 2017
The Good Partner


Project Publisher: Diana Viola
Project Director: Crystelle Coury
Senior Editor: Louis Haynes
Editor: Patrick Burton
Graphic Assistance: Miriam León
Cover: ©AT, 1985 by Antoni Taples. Fundacio Antoni Tapies Museum, Barcelona, Spain
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The Good Partner

Long considered rather isolated from the rest of the continent in terms of energy integration, Spain today poses a strong candidacy as a regional energy gateway and burgeoning gas hub for the European Union. "Against the backdrop of a rapidly evolving hydrocarbons landscape, our country stands poised to capitalize and establish itself as a primary guarantor of European energy security," proudly affirms Antoni Peris, president of the Spanish Gas Association (SEDIGAS).

Indeed, not only does the Iberian Peninsula geographically boast a highly strategic positioning, located along the Mediterranean and the Atlantic axes, and connected to the rest of the mainland through France, but also a diversified array of gas suppliers and entry points. With its Medgaz and Duran Farrell subsea pipelines bringing in reserves from Algeria and an elaborate network of LNG regasification plants, Spain enjoys enviable natural gas intake capacities of 21.5 trillion cubic meters and 60.12 trillion cubic meters from the two pipelines respectively. "While much of Europe stands vulnerable to an overreliance on Norwegian and Russian producers – in the latter instance, by means of pipelines crossing politically unstable states such as Turkey and the Ukraine – Spain stands out by offering a genuine alternative to this dependency, by sourcing gas simultaneously from as many as 11 different countries," exclaims Peris.

"Geopolitically speaking, this sort of vendor diversification counts as one of the most important variables when it comes to enhancing energy supply security, leaving us in a position where we could theoretically supply EU member states with as much as half of what Russia currently provides today," reflects Arcadio Gutiérrez Zapico, director general of the Club Español de la Energía. "There is, without doubt, scope for a much greater slice of Europe’s gas consumption to be met via southern supply routes, by harnessing Spain’s full potential as a transit corridor," confirms Pedro Miras Salamanca, chairman of CORES.

Antonio Llarden, executive chairman, Enagás

Maturing a Fledgling Gas Hub

Interestingly, Spain’s potential is not limited to being an energy doorway into Europe, but also as an outwards- facing window to the rest of the world. "Though we might appear to be on the periphery of Europe, we are actually located very centrally in relation to international maritime transport flows and rank within the top ten countries globally for maritime connectivity by virtue of the heavy traffic flows connecting Asia with the West via the Suez Canal and Gibraltar strait choke points," explains Jose Llorca Ortega, president of Puertos del Estado, the Spanish ports authority.

Mariano Marzo, an independent director to Spain’s foremost E&P actor, Repsol hopes that his country can thus speedily assert itself as a LNG transit and storage focal point, joining up some of the world’s most prospective markets. "We have the real possibility to act as an epicenter of activity linking up zones such as the Mediterranean with the Atlantic and Caspian," he declares.

Already signs are afoot to suggest that this is starting to happen. As far back as 2014, eyebrows were raised when Spain distinguished itself as the country with the highest volume of re-exported LNG in the world for that year. "One trend we noticed recently was how the country managed to deftly exploit its geographic placement between America and Asia to cater to a rapid increase in demand for natural gas in Japan at a juncture when import demand in Europe was tailing off as a result of the ongoing financial crisis... Spain's versatility in seizing this opportunity was seriously impressive," observes Burckhardt Compression's managing director, Javier Cuevas Martin.

Even greater activity is predicted as the LNG business gathers pace globally and fresh import markets spring up in places like Southeast Asia with new volumes of exports simultaneously emerging from the Arctic and Australasia. "Russian companies will begin to export LNG between 2018 and 2020 from the Arctic, and will need to use these kinds of facilities in Spain or elsewhere in order to put the LNG to into ice breaker natural gas tankers.... Five years ago, it would have been absolutely unthinkable to imagine LNG coming from the North of Russia, but in two or three years we will have it; along with considerably greater LNG inflows from places like the USA and Australia," forecasts Antonio Llarden, executive chairman of Enagás, a midstream gas outfit and EU licensed Transmission System Operator (TSO).

Jose Llorca Ortega, president, Puertos del Estado

An Advanced Enabling Infrastructure

What really brings the concept of a Spanish gas hub close to materialization is supporting infrastructure to back up the country's privileged geographic location. "Though you could argue that our national gas sector is comparatively young, having barely started out some 45 years ago, it is uncontestable that we now possess one of the strongest and most complete infrastructures in the entire region: seven of the 23 European regasification plants are located within Spanish territory while we also handle more than 14,000km of transmission pipeline," enthuses SEDIGAS secretary general, Marta Margarit.

Spain appears particularly powerful in maritime LNG infrastructure. With its regasification and unloading terminals astutely integrated into the country's primary seaports, where some 228 LNG ships discharged last year, Spain is the destination point for 36.5 percent of the offloaded LNG entering the EU.

Many of the facilities are also versatile, modern and well suited towards the prevailing tendency towards the maneuverability of small volumes. "In April, we conducted the first pipe-to-ship LNG bunkering and have been doing a lot to improve flexibility on a small scale and transforming LNG regasification terminals into multimodal terminals," explains Enagás' Llarden. "The future world of LNG will clearly revolve around virtual chains, multiple sources and shorter-term flexible contracts, requiring a tranche of fresh capabilities not only to re-gasify, but also to store the LNG for certain periods of time and then recuperate it when needed for deployment in accordance with shifts and fluctuations in demand. Within Enagás, I am proud to say that we have duly been upgrading our Spanish assets and are already well prepared to satisfy this rapidly evolving context," he adds.

At the same time, Spain's soft infrastructure - from regulatory frameworks to the ease, speed and price of doing business - further make it an appealing proposition for those seeking to make use of the country for natural gas logistics and trading. Firstly, the country's smooth running port system is ranked within the top five in Europe owing to competitive pricing structures and efficiency of operations. "To ensure that our ports remain internationally attractive, we have been taking steps to guarantee that the use of public infrastructure is as cheap as possible and that expenses incurred derive from the private sector," recalls Puertos del Estado's Llorca.

Rafael Villaseca, CEO, Gas Natural Fenosa

Midcat: The Missing Piece of the Jigsaw

One major stumbling block to Spain's aspiration to become a south west gas hub for the EU is the underdeveloped state of overland gas and electricity connectivity between the Iberian Peninsula and neighboring France. "Due to the sheer lack of interconnections with France in terms of gas and power generation, Spain sadly still feels very much like an island. This is a real problem because it disrupts our country's ambition to play a greater role in European energy security and also prevents the creation of a genuine single market by pushing members states on either side of the border to develop singular regulatory frameworks for power generation and supply," laments Gas Natural Fenosa's CEO, Rafael Villaseca. Clearly this does seem to be the case with France and Spain attaining electricity price congruence only a mere 35 percent of the time.

Back in 2012, work actually commenced on the so-called 'Midcat' initiative, a projected gas pipeline to link the Spanish and French natural gas systems through the regions of Catalonia and Midi-Pyrénées. While the laying of the first 87 kilometers stretch of the gas pipeline from Martorell to Hostalric was successfully completed, further progress on the establishment of this Mediterranean energy corridor was stopped following objections from France and Germany, despite the initiative receiving "project of common interest" status by the EU.

"The stalling of Midcat has had unfortunate consequences because Spain stood to assume a spot right at the heart of a spider web of energy flows linking Algeria, Morocco and Portugal with different EU member states... until this bottleneck is surmounted we can never realize that level of potential," bemoans Enagás' Llarden. He is cautiously optimistic, however, that it is just a matter of time before work recommences. "Right now, the initiative has been placed under the supervision of the European Commission, and we are awaiting a political decision in the first half of 2018 on how to get this project moving again."

The problem is that time may not be on Spain's side. "There is a bit of a race on, with different member states like Italy and even the Netherlands jockeying for position and pressing their cases as alternative hubs," confides Mariano Marzo. Italy, for instance, with contracted gas imports of up to 90 billion cubic meters, is already providing stern competition. By reversing flows on existing lines at the northern border and beefing up its transmission network in the north, Italy has the potential to stop and reroute some 15 bcm of imports, replacing them with gas from the south.

Arcadio Gutierrez Zapico, director general, Club Español de la Energía (Enerclub)

A Fount of Expertise in Energy Logistics

Hub or no hub, Spain's deep and prolonged involvement in hydrocarbons handling, logistics and processing has rendered its firms well exposed to cutting edge technology and know-how. Many are now busy exporting and applying this knowledge abroad. CLH, for example, in 2015 won a highly competitive tender from the British Ministry of Defence for a 2000 km network of pipeline and storage capacity for supplying military bases and airports across the United Kingdom. "CLH is recognized by the International Energy Agency (IEA), as one of the most efficient integrated transport and storage systems in the world so it doesn't really surprise me that the British Government, at the time of making their selection for the operation of an asset of such critical strategic importance, chose to go with a reliable operator with vast industry knowledge like us," proudly recalls Chairman López de Silanes.

Gas Natural Fenosa, meanwhile, renowned for having created one of the first LNG networks in Europe, has been using this reputation to penetrate multiple markets abroad. "Nowadays, a full 50 percent of our revenues derive from overseas and we are making much headway in Latin American states such as Colombia, Argentina, Panama and Chile...usually we start of by initiating commercial relations especially in LNG sales which enables us to amass a knowledge base over time with regard to the local business dynamics of those markets. Then when the respective governments get round to liberalizing the midstream and downstream gas sectors we can leverage that robust awareness of the local market to seize the initiative and get in quick as an early mover," reveals Villaseca.

Equally, Enagás has been "mobilizing well-honed competencies in LNG and considerable operational experience in high-pressure pipelines and regasification facilities to expand around the Pacific Rim of Latin America, servicing the markets of Mexico, Peru and Chile," according to Llarden.

Indeed Spanish companies increasingly appear to be the obvious 'go-to-partners of choice' when it comes to acquisition and transfer of cutting edge innovation in LNG. The Galician naval construction firm, Gabadi, for example, focuses on the development of containment systems for the transport and storage of LNG in cryogenic conditions, applying the GTT membrane technology used by 90 percent of gas carrier vessels in the world. "We enjoy the distinction of being the very first outfitting company that is not a shipyard to be granted approval to use patented GTT technology... Along with the increasing demand for fully LNG-powered construction, we are witnessing more and more shipyards trying to obtain GTT authorization yet, right now, there are only five companies that count with the requisite licenses to perform this type of activity and Gabadi is one them," enthuses the company's CEO, Antonio Jose Llago Hermida.

Antonio Jose Llago Hermida, CEO, Gabadi

Engineering and technology player, SENER, has been allocating part of its considerable R&D budget to innovation in floating storage regasification units (FSRUs) and small-scale and mid-size LNG, which it identifies as a big growth driver for the future. "One of our flagship projects abroad in which we are deploying this type of technology has been the Bolivian market where unforgiving geography escalates the expense of putting in physical pipelines. Instead we have created a virtual pipeline comprised of an inland liquefaction plant and a stream of 30 trucks that carry the gas to different parts of the country, where 27 satellite regasification terminals are installed," explains Borja Zarraga, the firm's power, oil and gas business manager.

What differentiates all of these Spanish entities from other offerings on the international market is their attentiveness to value creation and technological quality. "We usually compete for higher value complex solutions," explains Zarraga. "South Korean firms used to pose a threat, but overreached themselves and failed to capitalize on their international expansion so the primary contest now comes from the Chinese. SENER addresses this challenge by competing on technological innovation rather than price."

Gabadi's Llago perceives a similar dynamic at play. "South Korean companies used to provide stiff competition for services like outfitting. Recently, though, clients have grown concerned about the value proposition and widespread use of Chinese subcontractors. Our winning formula thus tends to be about offering elite technology and striking an optimum balance between service quality and speed of execution," he reasons.

Borja Zarraga, manager, Power, Oil & Gas Business Unit, SENER

E&P: Stillborn?

With Spain possessing such a wealth of talent in the mid-stream and down-stream parts of the oil and gas value chain, one could be forgiven for assuming that the conspicuous absence of activity in the upstream segment stems from the country being endowed with little or no natural resources. This, however, would be mistaken. On the contrary, three and a half years ago, a comprehensive preliminary evaluation of prospective conventional and unconventional hydrocarbons conducted by exploration and geological service outfit, Gessal, calculated a likely natural resource base of some 2 billion barrels of oil and 2.5 billion cubic meters of natural gas of which 80 percent could be found in shale rock.

"Spain possesses one of the lowest levels of deep surface research in the EU and the seismic data is very incomplete, but from what we have, the most prospective areas would appear to be shale plays in the Basque Country, Asturias and Cantabria. Then, in the offshore space, the most prolific deposits would seem to lie between Lanzarote, in the Canary Islands, and Morocco, and in the Bay of Valencia, close to Ibiza," assesses Juan Klimowitz Picola managing partner at Gessal.

Mario Armero Montes, executive vice president, Anfac

The country's track record on E&P activity however remains distinctly anemic. "Unfortunately, there has been a systematic failure to properly exploit our national resource base... when you consider that oil was first discovered in Spain in 1964 and that since then a mere 700 exploration wells have been drilled, this is an exceedingly poor tempo... the last serious E&P campaign to be conducted was almost 40 years ago!" sighs Margarita Hernando, secretary general of the Spanish Association of Companies of Research, Exploration and Production of Hydrocarbons (ACIEP).

The reasons behind this sluggish pace of investigation are manifold. Bureaucratic inertia is widespread with permits for exploration typically taking in excess of two years to process. Then there has been the strong opposition of public opinion towards hydraulic fracturing drilling techniques. Perhaps worst of all are the technical barriers. "Spain actually possesses a rather complicated and unusual geology, because of the alignment of the tectonic plates. Much of the easy resources to extract have already been exploited such as the historic gas reservoirs in Huesca, Serrablo. Getting the rest out would actually entail high tech, costly solutions... Even the offshore deposits around the Canary Islands are restricted by the fact that it is a volcanic hotspot," bemoans Manuel Moreu chairman of Seaplace, an engineering outfit specializing in fixed, floaters and subsea projects.

The reputation of in-country E&P activity took yet another hit in 2015 with the withdrawals of Repsol and Cairn Energy from the offshore space around the Canaries. Repsol had previously signaled its willingness commit some USD 10 billion to develop offshore fields, but disappointing results led to the abrupt cancellation of these plans. "The exploratory survey confirmed that oil and gas have been generated in the basin, although the deposits found have been saturated with water and the hydrocarbons present are in very thin, non-exploitable layers so we cannot justify continued investment," declared Spain's most prestigious oil and gas company.

Juan Ignacio Lema, president, Tecniberia

EPC: The Heavyweights are Coming!

Although Spain's domestic exploration segment has underperformed, the same certainly cannot be said for its engineering, procurement and construction (EPC) industry, which has attained global renown for its contribution to large infrastructure projects, especially in the energy sector. In 2016, Engineering News-Record (ENR) placed Spanish EPC actors in second position, behind China, in terms of international turnover, with almost 88 billion dollars in revenue.

Opinions diverge about how exactly so very many Spanish engineering and construction actors managed to make it to the big league. "With hindsight, two major events - the 1992 Olympic Games in Barcelona and 2006 Universal Expo in Seville - were watershed moments because they triggered a great flourishing in design and implementation of state-of-the-art, iconic public works, such as the Madrid-Seville high speed rail and upgrade of the nation's airports that exposed our engineering and construction firms to the very latest techniques and methodologies and got them noticed internationally," recalls Joan Franco Poblet, chairman of BAC Engineering.

Others believe it was the early impact of a sequence of crises - the financial meltdown, the housing bubble crash and the onset of prolonged recession - that compelled Spanish actors to be first movers in diversifying their offering and making the leap abroad. "The financial crisis had a dramatic impact and the domestic market disappeared, forcing our businesses to enter foreign markets very speedily or face an overnight collapse in their cash flow. EPC firms have thus acted as an outpost for a blossoming of Spanish exports, given that these were usually the first actors to arrive in new markets and successfully implement infrastructure projects that have showcased our talent," remarks Mario Armero Montes, currently board member of Gas Natural Fenosa, Executive Vice President of Anfac (The Spanish Association of Automobile and Truck Manufacturers) and former CLH board member.

One significant by-product of the crisis was a welter of mergers and acquisitions in the construction and engineering segments that resulted in entities with substantial muscle and considerable capabilities. "The Spanish engineering landscape had always been pretty atomistic with high volume of small family-run outfits, but post-crisis there was a big shake out and consolidation across the market producing newly fused behemoths with the wherewithal and financial firepower to spread their wings and go global," observes Poblet. "The remarkable thing is we somehow managed to get ourselves together and transform international markets into a parachute to overcome the crisis," opines Juan Ignacio Lema, president of Tecniberia, the Spanish Association of Engineering, Consulting and Technology Services.

In other words, Spanish engineering and construction firms (often with sizable energy sector portfolios) have managed to turn adversity to their advantage and have developed an innate steely-ness and resilience that enables them to outcompete their rivals even in the midst of the current oil price downturn. Dragados Offshore, a highly acclaimed subsidiary of Grupo ACS, commonly believed to be the world's largest EPC contractor, serves as an excellent example of the forces at play.

"Especially in our specialist area of high capex offshore projects, there are many companies that are not able to survive this part of the oil price cycle, but, being a Spanish firm, we are pretty accustomed to dealing with adversity and competing on the international stage because Spain does not have its own upstream oil projects... we have always survived through diversification. During this particular price collapse, we have entered the offshore renewable energy industry and two weeks ago, we were awarded the construction of a HDVC platform in partnership with Siemens. In a previous downturn, we entered the hydro-chemical machinery business to keep our facilities fully functional until the oil price recovered," recalls Pedro Ascorbe, Dragados Offshore's chairman and CEO.

Enjoying the sort of scale and muscle that its parent company affords is certainly an asset, he admits: "Being part of Grupo ACS definitely confers an advantage because of the synergies we can mobilize from our sister companies and the sheer financial backing we receive." Indeed, that backing enables the company to make countercyclical investments in a sustained manner. "The acquisition of a new yard at Altamira in Mexico has been our most significant investment in recent years because it encompasses deep water capacity and allows us to undertake increasingly challenging projects."

"Actually, Altamira remains a constant work in progress because we have been investing in new facilities in line with the market so we are constantly enlarging and modifying it to match the needs of each contract. Executing new projects often leads to new requirements; in the offshore industry, no two projects are the same. The fabrication phase and the assembly phase are such that companies require a large amount of space because in the vast majority of cases the components are not built in their final position," confides Ascorbe.

Pedro Ascorbe, president & CEO, Dragados Offshore

A Bright Future

All in all, Spain, despite the virtual inexistence of its own hydrocarbons exploration and production base represents a great partner both to its immediate region and around the world. At the European level, Spain holds the keys to a stable, secure energy future and its claim to mature into a southern energy corridor and multimodal gas hub will become ever stronger as the single EU energy market inches towards completion. At the global level, Spanish midstream and downstream service companies, from technology suppliers to logistics providers to integrated EPC outfits, offer reliable and competitive partnerships spanning entire continents. Moreover, innovative Spanish actors look strategically well placed to operate right the vanguard of unfolding tends in LNG. "It is often said that Spain missed out on the first and second energy epochs of coal and oil power," candidly admits Margarita Hernando of ACIEP, Spain's exploration and production association. "Third time around, however, we have learned our lesson and shall be a lead protagonist in the next great energy era of natural gas!" she confidently predicts.

Cepsa's Five Year Plan

Cepsa, one of the world's leading integrated energy companies, operating at every level of the oil value chain, has set itself the ambitious plan of doubling in value in the five-year period between 2015 and 2020 through intensive investment in both E&P and Petrochemicals. With new contracts signed in Algeria for the Rhourde El Krouf (RKF) and Ourhoud oil fields in E&P and the company becoming the second biggest global producer of phenol and acetone courtesy of its flagship chemical plant in Shanghai in petrochemicals, vice chairman and CEO Pedro Miró explains that "We are not yet at the end of this strategic plan and have had to react to dramatic changes in a variety of sectors only a couple of years ago, but generally we are advancing very well."

Pedro Miró, vice chairman & CEO, Cepsa

Miró points to Cepsa's integrated model as key to the company's past and future success, positing that although "it is extremely difficult to have all the business units meeting and surpassing expectations in a cyclical business ... it is equally very difficult for all business units to perform badly at the same time." Against a challenging backdrop of falling commodity prices, Miró favors a holistic strategy, emphasizing that "we want to have a globally profitable company. Therefore, if one part of the business is not performing so well, it will receive assistance using other Cepsa resources." Regardless of the means, Miró is clear that "the most important thing is that we are growing and that this growth is being achieved whilst maintaining a sensible and healthy financial position."

Mastery in Refining and Refined Products Logistics

Despite Spain's lack of domestically produced natural resources, the country has nonetheless managed to forge an outstanding refined products segment. "Today, the Spanish refining platform is one of the most sophisticated in existence and we export about 22 million tons per year, with the main destinations being the EU, North Africa and North America," analyses Alvaro Mazarrasa, director general of AOP, Spain's leading mid- and downstream association.

According to CORES' Miras, this ecosystem of high performance refineries and integrated storage and transport services is partly a legacy of the centrally planned, command economy of the Franco period. "Our robust refinery infrastructure derives from the monopolistic period, where the state created a strong and well-connected refining system out of necessity; a system that would have been, quite frankly, difficult to build so swiftly and comprehensively under free-market conditions," he muses.

Even today, oil products logistics heavyweight, Compañía Logística de Hidrocarburos (CLH), dominates the local market, owning and operating 90 percent of Spain's refined product pipeline and handling some eight million cubic meters of storage capacity. "We were born out of a monopoly that was capable of supplying the entire territory. Subsequently a decision was made to open up this market to a network of operators. The end outcome is an arrangement that differs markedly from most other European states where individual private enterprises build their own exclusive refineries and pipelines to distribute their own product. Nowhere else is there a model quite like this one. Only France comes close with an open oil pipeline network, but one which does not feature terminals, nor wield anything like the same transparency as ours," reflects the company's chairman, José Luis López de Silanes.

Alvaro Mazarrasa, director general, Asociacion Espanola de Operadores de Productos Petroliferos (AOP)

"We have 4,000 km of pipeline and 40 terminals along the coast and inland, which can be used by any operator, making it freely available in this sense. Any operator that wants to sell its products in Spain does not need to invest in logistics. Instead, they only need to commission a vessel operational in the North Sea or the Mediterranean, and get to Bilbao or Barcelona, and they can then take the product to Seville, Madrid or wherever they like," elaborates López de Silanes.

José Luis López de Silanes, chairman, CLH

Meanwhile Spain's 11 refineries are registering high output despite an overall Europe-wide retreat from refining in the wake of a stiffening of EU environmental regulations, which are estimated to add as much as USD 2/barrel to costs. According to the AOP's latest statistics, nine of the Spanish facilities are reporting a highly commendable average capacity use of above 90 percent. This, in turn, is explained by the technical superiority of most of the Spanish plants and sustained investment on upgrades from Repsol, Cepsa, and BP as they seek to generate complex derivatives of ever better quality.

"Our Castellon refinery is actually our best performing and most technologically advanced facility worldwide owing to great fundamentals and a consistent stream of investment over a 25 year period," acknowledges Luis Aires, BP's chairman. "It's true that we've pulled back from parts of Europe and sold off facilities in the UK and France, but Castellon really is a prize asset. Next year we will be commissioning a vacuum distillation unit and also a new coke barn and this comes on the back of a EUR 400 million (USD 448 million) upgrade that brought the refinery to its current standard," he adds.

Luis Aires, chairman, BP Spain

Cepsa, for its part, continues to maintain three Spanish refineries - in Tenerife, La Rábida in Huelva and Gibraltar-San Roque respectively - generating a range of oil products including diesel, gasoline, fuel oil and kerosene. "We continue to believe in the survival of this segment. While the final products and supply chains might evolve with time, there is always going to be demand for efficiently refined output, therefore our target is to consistently develop and improve the efficiency of our assets. If you look at integration with the chemical sector, on average the European refining industry is responsible for 50-55 percent of all integrations, but in our case, that figure is closer to 70 percent. We are consistently managing to obtain the highest added value for each of the molecules that we refine," reasons company vice chairman and CEO, Pedro Miró.

Indra: A Synergistic Approach to High-End Innovation

One actor that stands out among elite Spanish technology firms for embracing a multi-sectoral approach, assembling a highly diversified portfolio and then drawing upon a combined knowledge from different industrial sectors to devise 'beyond-the-box,' bespoke solutions is Indra. With complex technological solutions in fields as diverse as defense, security, telecoms, financial services energy and healthcare, Luis Abril, Indra's global head of energy, industry and consumer products, explains that "We have many examples of innovative digital-related capabilities that we are currently exploiting for use within the Energy Division, like those related to simulation; Indra's uncontested leadership in the development of simulators (our full-flight simulators for the aviation industry are considered state-of-the-art) is now being applied to the oil and gas industry to train up personnel in how to properly navigate the environment of an offshore oil platform."

Luis Abril, global head of energy, industry & consumer products, Indra

"Cyber-security is another very good example of how Indra is able to take capabilities from certain areas (i.e., the Defense & Security Division) and apply them into others (i.e., the Energy Division). As you can imagine, there is growing interest on the part of the energy industry in cyber-security due to the potential vulnerability of many of their critical assets such as oil and gas installations. Indra leverages its strength in IT-related defense and security solutions to offer a comprehensive range of cyber-security products and services," points out Roberto Diaz, Indra's global director of oil and gas.

Roberto Diaz, global director oil & gas, Indra

"The hydrocarbons industry tends to be very traditional in its mentality and still exudes difficulty in embracing the disruptive tendencies of the digital revolution, but this is clearly a sector that's going to be increasingly dependent on the Internet of Things and machine learning to become more efficient. Oil spillage detection systems are emblematic as the technology has evolved from semi-manual products to fully automatic devices, allowing companies to make quick decisions under critical circumstances. For example, our product HEADS (Hydrocarbon Early Automatic Detection System) allows the operator of an off-shore platform (or of any other asset with risk of oil spills) to detect, in a matter of minutes and without human intervention, small volumes of leaks on the water surface and tracks the evidences to enable forensic analysis," he explains.

The Canaries: The Ultimate Service Entrepôt for West Africa?

While many analysts have interpreted Repsol's unceremonious retreat from Canary Island exploration as the final nail in the coffin for domestic E&P activity, the Canaries' relevance to the oil and gas industry has never been greater. In the words of Seaplace's Manuel Moreu, the islands are fast emerging as "the logical location for establishing a regional service hub catering to a thriving West African oil and gas arena. We're talking about a site that is comparatively well connected by flights and where there is ready availability and access to essential services ranging from storage, logistics, and repair to maintenance... not to mention plans underway to install regasification terminals on Tenerife and Palma," he affirms.

Demetrio Carceller Arce, president, DISA

"The geographical positioning in close proximity to West Africa speaks for itself and the islands are strong in terms of political and social stability, fiscal and tax incentives, rule of law, quality of life, and necessary capabilities. Moreover, as part of the EU, they possess all the requisite conditions for installing industrial elements," agrees Llorca of the Spanish ports authority. "As a logistical base, the business rationale is sound with many companies from all over the world utilizing Canary ports and as a launch pad for interacting with nearby African markets... Numerous oilfield platforms are already being repaired on the island of Palma, which has recently generated a new dynamic of companies associated with the maritime business," he observes.

All of this is music to the ears of local entities like DISA, a Canary-based energy distributor with annual revenues of USD three billion for 2016 that achieved renown as the biggest independent operator within the country when it bought out Shell's assets in a landmark deal. "With regard to the hydrocarbons sector, we are seeing lots of opportunities cropping up: the linkages are already underway In terms of oil supply with Moroccan offshore exploitations most likely to account for a growing portion of the oil available on the island," remarks the company's president, Demetrio Carceller Arce. "We are thus gearing up to capture a slice of these news... while diversifying into upstream is going to be too capital intensive for a company like DISA, we do see ourselves playing a greater role in the downstream and already possess logistics capabilities to transport oil from the Canary Islands over to the Spanish Peninsula, or indeed to Africa."

His main worry, however, is that the islanders must prove more willing to embrace the oil and gas industry. "E&P companies must find agreements with the local population who are concerned about the possible impact on the tourism economy. As for myself, I think that the cohabitation of the two sectors is possible, provided that drilling is done right and that security and the environment are made a priority. Many touristic seaside resorts have oil platforms close to their beaches and it has not affected the tourist economy," he argues.