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U.S. fuel exports bound for Mexico's free market

AP/Matt Houston

Government-set prices completely removed from Mexico Thursday. Chevron, Koch and Kinder Morgan all want in on the competition.

By Laura Blewitt and Amy Stillman

Petroleumworld 12 04 17

From oil majors to trading companies to pipeline operators, U.S. companies are jumping at the chance to supply a newly free Mexico fuel market.

After years of preparation, Mexico finished liberalizing prices for gasoline and diesel across the country. Foreign companies were allowed to start moving fuels in April last year, but now consumers' costs will be more closely aligned with the ebbs and flows of the open market. As fuel specifications and prices align, U.S. companies are working to make transportation to Mexico seamless.

On the U.S. border with Mexico, trucks and trains scurry southward from Texas refineries to fuel distribution terminals south of the Rio Grande. An increasing number of foreign firms, including Koch Supply & Trading Mexico, or KMEX, 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. The vessel Crown II was fixed to haul Koch's second Mexican diesel import to Vopak's Veracruz terminal, the first non-Pemex terminal to import fuels, the company said.

“The transparency and market-based pricing associated with the regulatory reform, which goes into effect today, is helping KMEX to execute their business development plans in the country,” Eduardo Andrade, a distillates trader for Koch, said Thursday.

On Thursday, Mexico's energy regulator announced the end of government-set fuel prices in the remaining central and southern regions where price caps were still being applied.

Chevron Corp , Exxon Mobil Corp , Royal Dutch Shell Plc and BP Plc are among the international companies investing in service stations in Mexico and are now seeking to import fuel.

Chevron plans to import fuel into Mexico from California, where it has two refineries, once the infrastructure is available, Jose Parra, head of the company's Mexico fuel operations, said Thursday in Mexico City. Chevron plans to open 350 gas stations in Mexico in two to three years, while Exxon Mobil will inaugurate its first gas station in Mexico on Dec. 6, according to an emailed statement.

Kinder Morgan Inc has also added two gasoline grades on its California pipelines that meet Mexican specifications.

“We made changes to our Pacific operations manual to incorporate Mexico product grades in anticipation of future demand for those services,” Kinder Morgan spokeswoman Melissa Ruiz, said in an emailed response to questions.


Story by Laura Blewitt and Amy Stillman from Bloomberg.

/ 12 01 2017

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