Fri, Dec 08, 2017 - Page 10 News List

US refiners scramble to join a liberalized Mexican market

Bloomberg

Exxon Mobil Corp is joining Chevron Corp and other US refiners to supply the newly free Mexican fuel market.

Exxon on Wednesday sent two cargoes totaling 120,000 barrels of diesel and gasoline from a refinery in Beaumont, Texas, to a private terminal in San Luis Potosi, Mexico.

The company is moving cargoes along Kansas City Southern Railway Co’s network and plans to utilize the San Jose Iturbide terminal in Mexico’s Guanajuato state, which is being expanded, to bring in more supplies.

It aims to move product from its refineries along the Gulf Coast.

“Exxon Mobil is the first company to compete in the Mexican fuel market in an integrated form,” Carlos Rivas, general director of fuel for the company in Mexico, said on Wednesday.

After years of preparation, last week Mexico finished liberalizing prices for gasoline and diesel across the nation.

An increasing number of foreign firms plan to invest in port terminals, fuel storage facilities and other logistics infrastructure to compete with state-owned Petroleos Mexicanos, the country’s primary fuel vendor and distributor.

Mexico is aiming to boost its fuel inventory capacity to 30 days’ worth, in line with an international recommendation for 36, Mexican Secretary of Energy Minister Pedro Joaquin Coldwell said on Wednesday in Guanajuato, Mexico.

“US Gulf refineries have seen increasing utilization rates, they are cheaper and more efficient than they were previously and they have abundant supply for the Mexican market,” said Alejandra Leon, Latin America upstream director at IHS in Mexico City.

More private infrastructure projects would be ready in the next several years, making it easier for private companies to import fuel without going through Pemex, she added.

Exxon Mobil also indicated that it will open 50 service stations by the end of first quarter and invest more than US$300 million in Mexico’s energy sector.

Another cargo will arrive at San Luis Potosi with about 60,000 barrels of fuels, Rivas said.

Exxon could use Pemex pipelines or other facilities, and will also consider adding pipelines and more terminals than the two it has already announced, Rivas said.

Last week, Chevron said it would bring products from its California refining system to Mexico to supply its gas stations once the infrastructure becomes available.

Koch Supply and Trading Mexico is shipping diesel by tanker from the US to the port of Veracruz on Mexico’s East coast.

Kansas City Southern last month said that it was seeking an agreement with Pemex’s trading arm, PMI, to import US fuels via rail into its San Luis Potosi terminal. Pemex would then transport fuels via pipeline to supply the Mexico City area.

Imports accounted for almost 74 percent of Mexico’s gasoline and diesel sales in October as Pemex’s six refineries operated at their lowest volume in nearly 27 years due to unplanned stoppages, disruptions and maintenance.

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