Exxon Jumping in to Mexico’s Fuel Market With First U.S. Cargo
Exxon Mobil Corp. is joining Chevron Corp. and other U.S. refiners to supply the newly free Mexico fuel market.
Exxon said on Wednesday it will import fuel from its U.S. refineries into Mexico’s central state of Guanajuato by rail, making it one of the first private gas station operators to sell fuel to the nation without buying it from Pemex. After years of preparation, last week Mexico finished liberalizing prices for gasoline and diesel across the country.
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.
“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.”