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Exxon imports fuel by rail for Mexican retailer

01 Dec 2017 20:05 GMT
Exxon imports fuel by rail for Mexican retailer

Mexico City, 1 December (Argus) — ExxonMobil imported its first rail cargo of premium gasoline and diesel from the US into the central Mexican state of San Luis Potosi under an agreement with Mexican fuel retailer Grupo Orsan.

The 53,000 bl cargo, imported on 21 November, represents the first time a company other than Mexican state-run Pemex has brought in such a large quantity of fuel by rail since the country's ground-breaking energy reform enacted in 2014.

A second load of 60,000 bl of fuel is set to arrive at a San Luis Potosi terminal tomorrow, the director of the terminal told Argus.

The highly sensitive deal between ExxonMobil and Grupo Orsan, which has 140 retail fuel stations across Mexico, was kept secret for months. Downstream, Pemex has been reluctant to let competition in, with reports of discrimination against non-Pemex fuel transport trucks at its storage and supply terminals. A long-delayed open season process designed to open up part of Pemex's key infrastructure to third parties has also been made more complicated, now running six months behind schedule.

The arrival of new wholesale distributors, such as ExxonMobil and US independent refiner Andeavor, could begin to shake up prices. Gasoline and diesel prices have remained similar across the country, even after government-set price caps were lifted throughout the year.

Independent gasoline remains in very short supply, while state-run Pemex is still the sole supplier of most retail stations across the country. In October non-Pemex gasoline imports were growing but still only accounted for 0.8pc of all gasoline imports that month, at 147,800 bl (or 4,764 b/d).

The fuel terminal used by ExxonMobil, Central Mexico Termina (TCM) in San Luis Potosi, will be officially opened this month with an initial transloading capacity of 39,600 to 70,000 b/d. In its second phase, expected to begin operation in June 2018, TCM will have tanks with total fuel storage capacity of 300,000 bl, and 1.2mn bl by 2028.

It is one of the first non-Pemex terminals to enter operation since the reform. Other private terminals, which are seen as a safer investment than costlier pipelines, are under construction across the country.

The government's new minimum fuel storage policy has also helped reassure investors. The policy requires all refiners, importers, exporters and wholesale distributors in Mexico to have a minimum five-day fuel reserve by 1 January 2020, an eight- to nine-day reserve by 2022 and 10–13 days by 2025, depending on the region.

TCM is a joint-venture between railway company Kansas City Southern (45pc), the operator of the industrial park it is located in, WTC Industrial (45pc), and US-based Watco Companies (10pc). It includes a 12km-long (7.5mi) railway access. It received its first manifest train filled with diesel for KCS's own consumption in early October.

Two years into the project, TCM says it has yet to get its definitive storage permits from Mexico's environmental protection agency ASEA, which will allow them to begin construction of the tanks. In the meantime, fuel is transloaded from the railway tanks directly into Grupo Orsan's distribution trucks.

"We don't think the regulatory process was difficult, but we've had to be patient, working hand in hand with [agencies]," said TCM director Celeste Rebora Mier. "For all of us, this was a first."