Recent reforms have allowed private traders to import LPG to Mexico from the US Gulf coast, but the country will need to increase privately owned storage and transportation infrastructure, LPG Distributors Association president Luis Landeros said.
Production from Mexico's state-run Pemex still remains a major source of LPG but private importers are benefiting from lower Mont Belvieu, Texas, prices, Landeros said at the Argus Americas LPG Summit in Houston.
Further private infrastructure development is needed in Mexico as most is owned by Pemex. Storage facilities located near the coastal import facilities are far from the central and western regions where 63pc of LPG demand is located, he said.
LPG demand growth opportunities are available in other areas as 30pc of the population still uses wood for cooking, but pipelines and rail developments are needed to reach these more rural areas as well.
Projects to increase storage capacity are underway with a 1.8mn bl capacity cavern connected to the Pajaritos-Guadalajara pipeline which is expected to be finished in April 2017, Landeros said.
Other Latin American countries, including Chile and Brazil, import largely from the US and continue to be a source of demand for excess US LPG supply.
Reduction in freight costs and export terminal fees have made the Gulf coast a more attractive source for LPG imports in Chile, Felipe Silva, Empresas Lipigas supply manager, said.
Chile imports 84pc of its LPG supply and Silva expects imports from the Gulf to continue as it is the most cost effective. Further opportunities for LPG demand growth exist in residential heating and cooking, he said.
Of Brazil's total imports, 73pc come from the US Gulf coast, said Jeanne Saraiva, Ultragaz supply chain coordinator. Imports could increase as Brazilian production will not be able to meet rising demand over the next ten years, she said. However, similar to Mexico, expanding existing import and transportation infrastructure will be necessary.
