Mexico's Plan to Open Up Fuel Logistics Still Mired
11.23.2017 - NEWS

November 23, 2017 [Argus] - A commissioner from Mexico's energy regulatory commission (CRE) said technical challenges and a highly complex environment were to blame for months of delay in the opening up of state-run Pemex's fuel infrastructure.


The CRE is in charge of opening up Pemex’s existing fuel transport and storage infrastructure to third parties through a program of gradual and regional open seasons.

US independent refiner Andeavor, formally known as Tesoro, won capacity in Pemex’s first open season in the northwestern states of Baja California and Sonora in May.

But subsequent open seasons have been suspended indefinitely, and are now several months behind schedule.

The first open season was fairly straightforward, with little operative complexity,” CRE commissioner Montserrat Ramiro Ximenez said this week. But commissioners have found the second open season for all other northern border states particularly challenging.

Many pipelines arrive directly inside Pemex’s refinery, Ramiro said, requiring permits that were not under the authority of the CRE and causing further delays.

Whether the capacity volume Pemex wanted to offer was big enough to make the open season viable was another thorny issue, with an operator reluctant to abandon its infrastructure on one side, and new participants eager to acquire capacity on the other.

The open season presupposes that Pemex has enough capacity for others to transport their fuel, but in many cases, we [Pemex and the CRE] have conflicting opinions about what can be made available or not,” Ramiro said. “Logistics in Mexico is a very complicated cocktail.

Ramiro was answering other panelists at the Mexico International Energy conference, who echoed some of the main worries in the industry. Since independent fuel imports were allowed in April 2016, as a result of a groundbreaking energy reform, they have remained fairly low.

In October, the latest available data, independent gasoline were growing but still only accounted for 0.8pc of all gasoline imports that month, at 147,800 bl (or 4,764 b/d).

When it comes to logistics, we are in total darkness,” a former manager of Pemex fuel retail stations, Juan Lopez Huesca, said on the same panel. “Without the opening of the owner’s infrastructure it cannot work.

Carlos Rodriguez, operations manager at Bulk Shipping Mexico, a company that moves products, said a number of potential clients had approached him to export fuel to Mexico.

They want to bring product to Mexico, but we have nowhere to put it, it all belongs to Pemex,” Rodriguez said.

Both argued that postponing the open seasons without clear explanations since May has sent a red flag to investors. While new projects for fuel storage terminals are underway, investment in new pipelines remain scarce.

Ramiro acknowledged that the CRE had to fix the open season delay and send a positive signal to the industry. But the commissioner argued that investors need not wait for the open season to invest in infrastructure.

It became clear that we need more infrastructure, that Pemex’s infrastructure is insufficient and that, on top of that, it is very complex to try and share with somebody who does not want to lose its market and that has not separated its logistics arm from its refinery arm,” Ramiro said. “It is easy to make a viable case for new infrastructure.”

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