August 30, 2019 [Argus] – Monterra Energy said it will start building a Mexico City-area terminal as a “sister” to its flagship 2.2mn bl terminal under construction near the coastal import center of Tuxpan.

 
The inland terminal will be in the state of Mexico just outside Mexico City, on the busiest fuels route between the port of Tuxpan and the high-consumption hub in the capital city, Monterra president Michael Williams said at the Argus Mexico Fuel Markets Summit in Mexico City today.

The new terminal will likely have under 1mn bl of storage capacity and will have a throughput capacity of 50,000 b/d, Williams said. Monterra’s Valle de Mexico terminal system will have blending capabilities and connect with existing rail and pipeline capacity.

The terminal should allow double tank trucks — typically 60,000 l (15,850 USG) capacity trucks — coming from Tuxpan to unload. Double tank trucks are not allowed to enter most urban areas of Mexico City, Williams said, so smaller trucks will be loaded at the new terminal for the final haul into the city.

In the next two to three years Monterra expects private companies in Mexico to continue to develop that storage capacity for fuels at the country’s main entry ports of Tuxpan, Veracruz, Rosarito and Manzanillo, which would then serve major cities such as Monterrey, Guadalajara, and Mexico City. Inland strategic points include Mexico City’s suburban areas and San Luis Potosi, according to Williams.

Monterra’s terminal is one of about 48 permitted storage projects underway, plus 22 announced projects, that will add about 48mn bl of storage with investments of $4.64bn, according to the energy ministry Sener. Terminals actively under development that could come online in the next three to four years total 26.2mn bl, more than double state-owned Pemex’s existing 21.7mn bl worth of storage, former energy regulatory commission (CRE) president Francisco Salazar said in a separate presentation.

But Salazar highlighted technical questions that need to be addressed, especially regarding upcoming minimum storage requirements. Salazar has worked with about 70pc of the country’s new fuel storage projects as a consultant, and has “seen regulatory challenges” for his clients.

Effective 1 January Mexico will require most fuel market participants to maintain at least five day’s worth of their average demand on hand in storage. The regulation also allows for companies with insufficient storage capacity to comply through a system of buying vouchers from companies with excess capacity, Salazar said.

But the mechanisms for such a system would need to be refined, and questions about how to handle transactions between regulated and unregulated parties answered. The system was also address if a user’s supply requirements fall significantly, he said.

As these questions are ironed out, rail will continue to play a major role until the country’s new marine and inland terminals come online, and more pipelines can be developed, Williams and Salazar said. But a large proportion of refined products in the country will continue to move through trucks as there is no easy near-term solution to completely stop theft from pipelines. Mexico’s government continues to shut some pipelines as a way to control fuel theft.

“In Monterra’s estimate by the middle of 2021 the bulk of the newly planned private infrastructure will be up and running and will provide importers entry and storage alternatives to Pemex,” Williams said. “The result will be market efficiencies and improved storage coverage.”

 
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