Valero expects fuel exports to Mexico to increase with new Altamira terminal

Valero expects its fuel exports to Mexico to increase later in 2024 as a new import terminal in the port of Altamira in the state of Tamaulipas becomes operational, management said April 25.

The company is focusing on maritime imports to serve the Mexican market and minimize its imports through rail.

“Our sales in Mexico have been consistent with historic levels,” said Gary Simmons, chief operating officer, during the company’s Q1 earnings call with analysts. “We would expect to see that kind of ramp up later this year when we get our marine terminal in Altamira up and running,” he said.

In the first quarter of 2024, Valero exported 103,000 b/d of gasoline; 153,000 b/d of diesel and 25,000 b/d of jet fuel to Mexico, management said.

The new terminal in Altamira will allow Valero to be more “competitive” in the north of the country, where the industrial city of Monterrey is located, Simmons said.

The Altamira terminal was expected to be completed in mid-2023, according to the original plans. When the new 1.1 million-barrel terminal in Altamira is completed, the company will have a total storage capacity of 4.6 million barrels in the country, the company’s Mexico head Carlos Garcia told S&P Global Commodity Insights in a 2023 interview.

Valero is working on obtaining permits for another terminal near the city of Guadalajara with a capacity of 505,000 barrels, according to Garcia. Valero imports most of the fuel it distributes in Mexico through a 2 million-barrel terminal in the port of Veracruz. The terminal, built by California-based Sempra Energy, supplies to other two terminals in the states of Puebla and Mexico, near the capital city.

Opposing expectations
Valero’s expectation contrasts with the official vision of the Mexican government to be self-sufficient in fuels by the end of 2024. During his term, President Andres Manuel Lopez Obrador has doubled down on the country’s refining strategy to reduce Mexico’s dependence on imports. During his term, he has constantly promised the country will be self-sufficient and use all its crude for its own consumption, putting an end to crude exports.

To do so, the government bought the 50% it did not already own in a refinery in Texas and began the construction of another in the port of Dos Bocas, called Olmeca, the seventh in the country. The 340,000 b/d refinery was inaugurated in July 2022, but the start of operations has been postponed many times since.

According to the latest data, Mexico consumed 631,600 b/d of gasoline and 251,000 b/d of diesel in January, according to energy secretariat data. Pemex’s gasoline production in January was 308,000 b/d, and its diesel production stood at 193,000 b/d, the data shows. The country imported 458,000 b/d of gasoline and 169,000 b/d of diesel, with Pemex as the main importer, the data shows.
Source: Platts