Mexico Delays Award of PEMEX's Fuel Logistics Capacities Again

Mexico's Energy Regulatory Commission (CRE) has delayed again the award of Pemex's oil products pipeline and storage capacities in Guaymas and Rosarito in Region 1 to private parties.

The latest delay pushed the award data back by another week to May 2. This award process has been delayed multiple times since February. CRE was to award the capacities on Monday.

CRE Commissioner Guillermo Zuniga told OPIS on Tuesday that Pemex is in charge of the open season process and CRE is responsible for the award of contracts.

Zuniga was speaking on the sidelines of OPIS Mexico-U.S. Petroleum Summit on Tuesday. The two-day Houston conference will end on Wednesday.

"It is not easy for Pemex to give out these capacities," he said. Zuniga said that the continuous delays to award the logistics capacities would only hurt Pemex in the long run as private companies would speed up their investments to build logistics assets in Mexico. These private logistics assets would then compete directly with Pemex.

"The Pemex open season (logistics assets) is only important now because there is a lack of private facilities in Mexico. In the long run, the open season will not be an issue," he said.

Zuniga pointed out that while leasing out logistics capacities to third parties would increase local market competition for Pemex, Pemex would be making money from these leases.

CRE is currently handling the award of close to 30 open seasons, including Pemex fuel logistics assets, he added.

Some potential investors and logistics players in the U.S. were less than impressed with the consistent delays for the Pemex logistics open season. They cited diminishing confidence in the Mexican system or oil market liberalization process.

OPIS reported in March that the open season was delayed due to an error in the tariff formulation process.

Guaymas and Rosarito are the locations for waterborne products imports on the west coast of Mexico. Region 1 will be the first market in Mexico to see free-floating products prices.

The error in the tariff formulation for Pemex's terminals and pipelines could be traced to a "mix-up" on the calculation of pipeline and storage fees for third parties versus Pemex's actual logistics costs.

In the first phase of Pemex's open season, there were 22 prequalified companies, including Shell, Chevron, BP, Petroleum Services International, Otto Service, Tesoro Mexico Supply & Marketing, Oleum Chemicarum Consumens, San Quintin Fuel Distribution Company, Gulfport, Trafigura and Pacific Fuel Provider, GPG Technologies, Grupo Comercial de Mexico, Glencore, Pepper Energy, Hydrocarbon Storage Terminal, Petromax, Energeticas UNEGAS, Koch Supply & Trading Mexico and Windstar Energy Resources.

CRE had said the open season, which allows third-party shippers to ship and store products on Pemex's logistics system, will increase efficiency in the Mexican oil industry and provide greater certainty to importers and marketers. The opening of Pemex's midstream system to third-party shippers is in line with the legal provisions established by Mexican energy reforms.

OPIS notes that Pemex pipelines and storage systems are currently closed to third parties. Pemex continues to have the monopoly of the Mexican oil products market despite import liberalization last year.

The slow import flow by private companies so far this year is blamed on logistics constraints and fuel specification issues. Mexico is one of the largest U.S. oil products export destinations in terms of volume, and this north-south flow has increased in the past year due to nagging Mexican refinery issues.

https://www.tankterminals.com/news_detail.php?id=4348&utm_medium=email&utm_campaign=Subscribers%20-%20Week%2018&utm_content=Subscribers%20-%20Week%2018+CID_775da81a0c5313f7b4ec1b3ddf87f5dc&utm_source=Weekly&utm_term=Mexico%20Delays%20Award%20of%20PEMEXs%20Fuel%20Logistics%20Capacities%20Again