Recope

It isn’t easy getting hold of gasoline at the moment. Along with diesel and other oil products Costa Rica is simply not the best place for these products at the moment. An accident in 2011 instigated the decision that the country’s refinery Moin, which formed part of the Caribbean port of Limon was simply too expensive to sustain and since, the country has leant heavily upon imported petroleum products.

WRITTEN BY JACK SLATER

LOTS IN THE PIPELINE

www.littlegatepublishing.com

RECOPE COSTA RICA

00506 2284 2700WWW.RECOPE.GO.CR

RECOPE COSTA RICA

Compared to the rest of the world, Costa Rica’s economy was only mildly affected by the global recession that brought other countries to their knees. A contraction of 1.3 percent 2009 gave way to resumed growth of about 4.5 percent annually between the years of 2010 and 2012. Bananas, coffee, sugar and beef are still the foundation of commodity export trade however high value goods and services, including high end technology manufacturing have bolstered exports. Tourism also brings much foreign expenditure and Costa Rica benefits from a wonderfully colourful and prolific biodiversity that makes it a much loved and much visited tourist bolthole. It is the oil industry however that acquires the best attention thanks to estimates in early 2013 that the Costa Rican oil sector generated in excess of $2 trillion.

Due to this proficiency in the industry, many foreign investors remain attracted to Costa Rica’s political stability, relatively high education levels as well as the many incentives offered by the free-trade zones. In 2009, Costa Rican leaders declared that it would become the world’s first carbon-neutral nation by 2021, accounting for transportation, energy consumption and manufacturing sectors as well as agriculture which accounts for 37 percent of the country’s total emissions. Fortunately such a declaration has been supported by the business sector.

With over half a century worth of experience and considered the largest company in Central America, The Costa Rican Oil Refinery ( RECOPE ) took on the task of importing, refining, processing and distributing fuels throughout Costa Rica in 1963, a task that was retained after the country’s nationalization in 1974. Now, it provides over 70% of the energy required for commercial economic and social development throughout Costa Rica and has managed to retain the competitive edge that originally set them apart over fifty years ago.

RECOPE was created by the legislative assembly, or Congress, as a commercial company although it does remain completely government-owned and is already playing a vital part in the ongoing battle against emissions, having implemented a decision in 2011 to

lead the entire region in introducing low sulphur diesel. Having built up adequate infrastructure across the country, with

the main towns being supplied by four strategically located tank farms that are linked with each other and to the oil port at Moin by a network of pipelines and three of them run from the Atlantic, or Caribbean coast to the capital San Jose, and three more from the Pacific coast.

There are no problems with pumping, Erick Solano, Project Manager for the newly developing Moin Refinery tells us, “We have the capacity to supply all demand at this moment and new tanks are being built to ensure the supply to our clients in the future,”

RECOPE, has also set up operations in Costa Rica’s three international airports at Liberia, Limón and San Jose itself, as well as the main domestic airports to enhance their supply efficiency of aviation fuel. After some issues with tank capacity, a new tank farm and sales terminal has been constructed at Liberia airport in the north of the country. Investments into these areas is as important as it was the aviation fuel side of the business that was struck the hardest by the recession.

However, these problems will be over when the new and expanded refinery has been built at the Moin site, and that could be delivered by 2018, this being the project that Erick is leading.

The project hasn’t been without it’s hurdles and obstacles, the feasibility study on which the project was based was rejected by the Costa Rican Controller’s office because it was carried out by HQCEC, a subsidiary of CNPC — an arrangement prohibited under the Soresco JV agreement. The same office also said that the study could have underestimated costs in order to inflate the project’s estimated rate of return of at least 16 percent. Furthermore that it failed to address project risks, analyse the Costa Rican oil market and regulatory framework, or provide financial details to back up its calculations.

Costa Rica has been commended for sticking to their best practice policies in this regard but now it has befallen their shoulders

RECOPE COSTA RICA

Costa Rica is the most developed and prosperous democracy in Central America and with its 4.5 million citizens it enjoys a good standard of living with per capita income at around $10,000.

RECOPE COSTA RICA

to get the project back on track. With this in mind a new feasibility study has been commissioned and is going through and the revised plan will dramatically increase the refinery’s capabilities, tripling it to 60k bpd. Prepared with the help of experienced regional partners to introduce the products that will help the Costa Rican plan to get them to a carbon neutral future. Biodiesel, produced from corn and sugar cane offers the great advantage of being carbon neutral on a lifecycle basis.

Though Recope will not be producing its own bioethanol, it will be able to obtain it locally, among other places from the modern plant of the sugar refiner CATSA, for blending into increasingly low-emission fuels. One of the other green innovations at the refinery that is important to mention is the introduction of LNG to provide the heat required in its processes, and the existing electrical equipment at the plant is being assessed for conversion.

As its use increases nationally, whether RECOPE will be given the mandate to distribute LNG is unclear, however from its incorporation it was given a monopoly to import, refine and distribute hydrocarbon products but whether LNG comes under this statute is disputed. However, it would seem to be the obvious choice thanks to the already established infrastructure and the expertise they already have.

The total storage capacity RECOPE is approximately 3,495,000 barrels and the country consumes about 50,000 barrels per day, this means almost 70 days of inventory, which allows RECOPE to fulfil its mission to supply the fuel uninterrupted across Costa Rica, operating 24 hours a day, 7 days a week.

Marketing and supplying super gasoline, petrol Plus 91, diesel 50, aviation fuel Jet-A1, AV-GAS Gasoline, Kerosene Aviation Asphalt AC-30, Bunker, Liquefied Petroleum , IFOS, Asphalt Emulsion, Heavy Diesel and Heavy Naphtha. RECOPE also maintains a distribution pilot project on campus at Barranca where gasoline is blended with ethanol, “This is only distributed in the provinces of Puntarenas and Guanacaste,” Erick explains, “But the plan is to extend this to the whole country soon.”

Extension, adaptation and growth is key to RECOPEs grand plans and in the area of research and development they have a biodiesel pilot plant and are working with internships, state universities, and research centres they are actively investigating the development of alternative fuels along the lines of biofuels, natural gas and hydrogen.

Customer satisfaction and the safety, development and consideration of all their 1800 staff are at the very forefront of RECOPE’s approach to business. Driving the business forward in accordance to the highest ethical principles and making rational and efficient uses of the company’s position has become something of an obsession.

“RECOPE has become a pillar to the Costa Rican economy,” Erick says, “Who rely on us for quality products, services and

competitiveness but also our approach to reducing our carbon foot and acting sustainable and socially responsible enable us to protect the Costa Rican landscape.”

A corporate culture has been established that has focussed on efficient simplifications of processes that can reduce costs and expenses so that the prices in Costa Rica can be kept at the most competitive while also ensuring the continuous supply of the product. All the employees are highly trained and dutifully experienced, the benefit of the five decades that they have led this industry in their country means that training is sourced from high experienced

technicians who have grown and developed within this industry.

Erick explains that the staff culture is one of looking at completing all tasks quickly and completely, after so long working within this particular sector a hard lesson that was learnt early on was how negligence on small issues can result in big problems down the line. Everything is connected and every part relies on every other part functioning well, “Consolidating the career of RECOPE each employee has a compliance with objective goals, performance evaluation and professional development, through training and the use of our recently created virtual university.”

RECOPE COSTA RICA

Management is also periodically evaluated to ensure that from top to bottom the company is running as well as needs to, with this in mind promotion is from within and industry experience is valued almost as much as the product that they supply.

Indeed, so deep is their commitment to their staff that RECOPE has created a comprehensive prevention against alcohol and drug abuse. Within this legal framework they have strictly prohibited the possession, distribution, sale and consumption of alcohol and other drugs in their facilities and during the workdays.

The job of overseeing the implementation of Plan B for the refinery, as well as completing expansion of the Moin oil port and upgrading the tank farm to increase RECOPE’s LPG and oil storage capacity, has been given to this veteran company. The harbour expansion is well under way and should be complete by the end of 2014 – the $96 million project funded by RECOPE and built by a Mexican-Costa Rican consortium will allow the oil terminal on the country’s Caribbean coast to accommodate tankers of between 40,000 and 80,000 tons.

“This will be a major step towards a totally green period for Costa Rica,” Erick concludes.

Guatemala ◆ Honduras ◆ Nicaragua ◆ Panamá ◆ Colombia ◆ Peru

Leader in project development, focused on clean energy power generation, civil infrastructure construction and heavy metal fabricationBuilding A-1, Alajuela, Costa Rica ◆ P.O. Box 4003Ph +(506) 24364000 ◆ USA +1 786 [email protected] ◆ www.grupo-saret.com

Grupo Saret manages three business portfolios with special emphasis in the generation of energy using renewable energy resources, with projects in Central and South America.

1. The main one is the heavy metal fabrication company focused in the fabrication and erection of fuel tanks, silos, pipes, gates and similar products.

2. The energy investments in power plants that are both: in developing or in commercial operation, as well as green field projects.

3. Other investments, such us the Caldera Port, Alajuela and Puntarenas Industrial parks, and two investments in the tourism and real estate sector in Costa Rica.