Andrés Roccatagliata, Enap General Manager: “We have taken painful measures, but it is more painful to be a burden on the State”

This 2020, highly complex for various industries, has been extremely challenging for the oil industry, which has faced falling prices and depressed demand.

For the state oil company Enap and its businesses, this whole scenario forced them to redouble the efforts it had already been making in terms of efficiency, which has been one of the stamps that Andrés Roccatagliata, Enap’s general manager, has tried to print since a little over two years ago. This Friday, the company presented its third quarter results, which showed a meager profit, but profit nonetheless. In his opinion, this is the result of a cultural change that has been attempted to be transmitted internally, where the focus has been on efficiency.

“They have asked me several times and it may sound cliché, but that we are state-owned is no excuse for not being efficient,” the executive said in this interview.

How have you coped this year, considering all the problems the industry has had?

-In this third quarter, in which the industry is in pieces, with Shell losing US $ 17,000 million, BP another US $ 20 billion … where only in six months the increase in debt was almost US $ 130 billion. They are figures that give chills. We did the hit last year and this year. We have tightened our belts and made adjustments and, this quarter, totally out of the way the market expected, from losing hundreds of millions of dollars, we made US $ 2 million. We are happy, but what we hope is that it is not an accident, that we develop a culture of doing things well, with efficiency, productivity, integrity, with well-dimensioned projects.

What have been the priorities?

-When all this started at the beginning of the year, we set ourselves three priorities: safeguarding the health of all of us who work here, that there was no shortage and minimizing losses. That was the mandate that the board gave us. We have a strategic plan that is not suspended, but in this period we have concentrated on these three things.

What were the expectations?

-The entire market, given the scenario, estimated that Enap was going to lose US $ 500 million. Fortunately, we have been working on efficiency measures since 2018. We had to inherit a company with very bad figures, a debt of US $ 5.5 billion, which had also been growing every year at a rate of US $ 500 million. Then we had to do a very complicated reduction of personnel, at the beginning of 2019, almost 700 people, and without noise.

What other efficiency measures did they take?

-This cut was mainly in the first line, managers, managers, project directors and workers, close to 5%. What we tried to do was shrink the structure. Then we hit a good cut to everything that is investments. The company has an interest discounted Ebitda of more or less US $ 400 million. That could be reversed if you don’t want to go into debt. But Enap had been investing in the order of US $ 800 million. So that generated significant savings for us. We eliminated trips, consultancies, bonuses, we did several things that allowed us to save about US $ 120 million in 2019, with which we started 2020 much better.

In terms of supply, what changes did you implement?

-What we did was improve the crude buying process. We bought crude in few countries, basically where they have tariffs. And we realized that paying tariffs is not bad, because they remain in the country. And if the price discounting tariff is cheaper, we all win. Therefore, by opening this, we had access to a much bigger market, and the current suppliers, realizing that we were buying anywhere, also lowered the prices. That allowed us to lower the cost of the basket.

What other adjustments did they make?

-With contractors, for example, we have made a rationalization plan. The company had something like 6,700 contractors and today there are 4,200. These things sound painful, but it is more painful to be a company that is a burden on the state. That is what we do not want. It makes sense to contribute and not be a lead lifesaver.

With regard to debt, which is another issue that we have been concerned about, the company paid almost US $ 250 million in interest annually. You get lost with the numbers, but $ 250 million in interest is like $ 200 billion in interest alone, something like $ 700 million a day in interest. Imagine how many things could be done just with the interest that Enap pays. We also define ourselves to lower the level of debt, restructure liabilities. Today we have a debt of around US $ 4.4 billion. And we have restructured it well. On that side, things have also worked for us. But the main message is that the money is not ours. It belongs to everyone, and you have to take care of it. Being a strategic, state-owned company, it is not an explanation for not doing things well. And that culture, which is difficult to permeate, is the one that we have tried to instill in the company and that we want it to last over time.

How has the demand behaved in recent months?

-During the second quarter it was the worst, with falls of around 40%. Now, what we are doing, rather than comparing ourselves with the same month last year, we are doing it with the previous month. And fortunately we are improving, around 5% or 10% every month. We have projected to October, compared to the same period last year, a lower demand of around 15%, but 3% compared to the previous month considering the same number of days. It has been improving and we are estimating that by the end of the year we would arrive with a demand of around -10%, compared to -40% in its worst situation.

Have they had to change the strategic plan due to the emergency?

-Our plan has several pillars that we have defined, in addition to installing a system of probity, efficiency and doing things right the first time. As this is a country that depends on imports, because we do not have crude, we are strengthening the logistics part.

In terms of projects, what are they doing?

-For example, we are improving refining capacity, that is very important. In addition, a few days ago we started up our wind farm in Magallanes, we are participating in the green hydrogen project, we are decarbonizing our Biobío cogenerator, which today works with coke and we want to turn it to gas. Our role is not only to tighten our belts and ensure that the company does not lose money, but also to give Enap a strategic sense.