Mexico buys fuel trucks to contain supply crisis

The Mexican government signed contracts to purchase 571 tanker trucks as part of its strategy to stabilize fuel distribution and crack down on theft, President Andres Manuel Lopez Obrador said.

Mexico's fuel supply crisis has intensified in the wake of a deadly 18 January pipeline explosion triggered by one of thousands of illicit valves.

The government purchased the trucks for $85mn from unnamed US companies, dispensing with a public tender to resolve the fuel supply "emergency", Lopez Obrador told reporters this morning.

Fuel shortages in central and western Mexico began in late December after the government launched an anti-theft campaign that shut key distribution pipelines in favor of more costly trucks.

The new trucks will start delivering around 116,000 b/d of fuel by the end of March, less than the 200,000 b/d that was initially proposed, Lopez Obrador said this morning.

The cost of transporting gasoline and diesel by truck is nearly 14 times more expensive than pipeline transport, according to a study by Mexico's competition commission, Cofece.

The government is currently investigating the cause of the explosion on the 82,000 b/d Tuxpan-Tula products pipeline in Tlahuelilpan, Hidalgo state, and the reasons for the delay in suspending flows on the pipeline, said Lopez Obrador.

The illegal tap, 14km (8.6mi) from state-owned Pemex's 315,000 b/d Tula refinery, was identified at about 2.30pm ET on 18 January. Around 25 soldiers were present at the tap site but could not control hundreds of people who turned up to collect the gushing fuel.

The pipeline flow was not suspended until 7.30pm ET, shortly after which the pipeline exploded, according to an updated timeline provided by the government.

Pemex has imported an average of 764,800 b/d of gasoline so far this month, up by 37pc on December's 559,000 b/d. Private-sector companies together imported 49,700 b/d of gasoline, up by 19pc from the 41,900 b/d average in December, according to energy ministry data.

Pemex has detected 70 illegal taps on the four pipeline systems that cross Tlahuelilpan since 2016, six of which resulted in fires, Pemex chief executive Octavio Romero said this morning.

During the first 21 days of this year, Pemex repaired 164 illegal taps, three of which were located in Tlahuelilpan.

Hidalgo accounted for the largest number of illicit valves last year with 2,121 taps, followed by Puebla with 2,072, Guanajuato with 1,919 and Jalisco with 1,550 illegal taps, said Romero.

Between 2016 and 2019, some 80pc of all illegal taps were located in seven of Mexico´s 32 states; Hidalgo, Puebla, Guanajuato, Veracruz, Jalisco, Mexico state and Tamaulipas.