Andeavor securing northwest Mexico fuel capacity

Andeavor continues to hammer out the financial details with Mexican state-owned oil firm Pemex for newly awarded refined products pipeline and storage capacity that extends the US independent refiner's reach into northwest Mexico.

"The specifics of the bid are confidential and we are currently in the process of reaching definitive agreements with Pemex Logística," Andeavor said over the weekend.

This is the company's second successful bid for Pemex's capacity in northwest Mexico and includes the closest offerings to Andeavor's 125,000 b/d refinery in El Paso, Texas. This facility already supplies a pipeline connection across the US border into Chihuahua, Mexico.

"With these additional positions, we intend to continue our strategic expansion within Mexico by further extending our existing west coast and southwest integrated value chains," Andeavor said.

The company won rights to 107,613 bl of storage capacity, including at three marine terminals in the states of Baja California Sur and Sinaloa and two terminals in Chihuahua. It also won 1,500 b/d of capacity on a products pipeline from El Paso to Juarez, Mexico, and another 1,500 b/d on a bidirectional line between Juarez and Chihuahua, Mexico.

This second auction came after Marathon Petroleum has said it plans to acquire the company this year.

Andeavor has been the only company to ever take capacity in Pemex's open seasons for its storage and transportation infrastructure, which were required under Mexico's 2014 energy reform to break down the former monopoly. Andeavor, formerly Tesoro until 2017, operates a tightly integrated refining and retail business in the western US.

The company won 315,000 bl of storage space and 9,535 b/d of pipeline capacity in Sonora and Baja California in Pemex's first tender for such space, held in May 2017. Andeavor began using that capacity to supply its Arco wholesale fuel business in northwest Mexico.

The company is also building its own refined products terminal in Rosarito, Baja California, to supply its Arco wholesale fuel business.