(Bloomberg) -- Exxon Mobil Corp. is joining Chevron Corp. and other U.S. refiners to supply the newly free Mexico fuel market.
Exxon sent two cargoes totaling 120,000 barrel of diesel and gasoline Wednesday from its refinery in Beaumont, Texas, to a private terminal in San Luis Potosi. The company is moving cargos along Kansas City Southern’s rail network and plans to utilize the San Jose Iturbide terminal in Guanajuato state, which is being expanded, to bring in more supplies. Eventually, it aims to move product from all of its refineries along the Gulf Coast.
“ExxonMobil is the first company to compete in the Mexican fuel market in an integrated form,” Carlos Rivas, general director of fuel for Exxon Mobil in Mexico, said in a phone interview.
An increasing number of foreign firms plan to invest in ports terminals, fuel storage facilities and other logistics infrastructure in order to compete with state-owned Petroleos Mexicanos, the primary fuel vendor and distributor in the country. Last week, Chevron said it will bring products from its California refining system to Mexico to supply its gas stations once the infrastructure becomes available. After years of preparation, last week Mexico finished liberalizing prices for gasoline and diesel across the country.
“U.S. Gulf refineries have seen increasing utilization rates, they are cheaper and more efficient than they were previously, and they have abundant supply for the Mexican market,” said Alejandra Leon, Latin America upstream director at IHS in Mexico City. More private infrastructure projects would be ready in the next several years, making it easier for private companies to import fuel without going through Pemex, she added.
Imports accounted for almost 74 percent of Mexico’s gasoline and diesel sales in October as Pemex’s six refineries operated at their lowest volume in nearly 27 years because of unplanned stoppages, disruptions and maintenance. Delays in restart of the Minatitlan and Madero refineries could also contribute to higher imports, Ixchel Castro, senior analyst at energy consultant Wood Mackenzie in Mexico City, said.
The expansion of Mexico’s private fuel import market could result in the “crowding out” of domestic gasoline production, BBVA analysts Carlos Serrano and Arnulfo Rodriguez said in a Dec. 1 research note.
“Looking ahead we expect the oil trade deficit to continue widening, although at a slower pace, as higher local demand for oil-related consumption and intermediate goods will more likely be met by imports rather than local refineries output.”
To contact the reporters on this story: Amy Stillman in Mexico City at firstname.lastname@example.org; Adam Williams in Mexico City at email@example.com. To contact the editors responsible for this story: David Marino at firstname.lastname@example.org Debarati Roy, Mike Jeffers.