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Tesoro wins Pemex fuel pipeline, storage auction

02 May 2017 20:06 (+01:00 GMT)
Tesoro wins Pemex fuel pipeline, storage auction

Adds open season winning bidder.

Mexico City, 2 May (Argus) — US refiner Tesoro was the successful bidder in Pemex's long-delayed refined fuels pipeline and storage capacity open season today, garnering up to 24pc of capacity in the northwestern states of Baja California and Sonora for the next three years.

The open season was first scheduled to take place on 15 March but was abruptly cancelled half-way through. Mexico's energy regulatory commission (CRE), responsible for supervising the auction, cited methodology problems, but sources told Argus conflicts over the auction's minimum prices — which were then kept secret to all 22 approved participants until the day of the auction — were behind the delay.

The 320,679 bls of storage capacity up for grabs was divided up between nine storage systems in Rosarito, Ensenada, and Mexicali in Baja California; and Hermosillo, Guaymas, Ciudad Obregon, Navojoa, Magdalena and Nogales in Sonora.

Tesoro also won transportation capacity on four pipelines: Rosarito to Ensenada (2,350 b/d), Rosarito to Mexicali (2,300 b/d), Guaymas to Ciudad Obregon (2,314 b/d) and Guaymas to Hermosillo (2,571 b/d).

"We received bids for all offered services, both in pipeline transport and storage," Pemex said in a statement. "We assigned capacity for a period of three years to Tesoro, with tariffs above the minimums established by Pemex."

Pemex developed the formula that determined minimum auction prices based on its transport and storage costs, but the CRE decides the final minimum prices. In today's open season, the minimum tariff was unveiled to all pre-qualified companies prior to the auction. Bids had to include a price equal to or above that minimum price. Interested bidders also had to submit a bid bond of 2mn pesos ($106,000).

According to Pemex, the company received offers on 28 April to review for any potential incomplete or unviable bids. The contracts awarded today will have a three-year period.

The open season was designed to free-up capacity on Pemex's infrastructure — essentially the only infrastructure operator in Mexico — before the liberalization of fuel prices in those two states on 30 March. The opening of downstream markets in Mexico has been much slower than for upstream markets, where various domestic and foreign companies aside from Pemex are already operating and producing a small but symbolic volume of oil and gas.

Downstream, a few companies have started re-branding their Pemex franchises but all are still buying gasoline and diesel from Pemex. And although more than 400 import permits have been awarded by the energy secretary since April 2016, independent gasoline and diesel imports in the country have yet to kick off because of a lack of open transport and storage infrastructure.