Mexican Fuel Retailer Petro 7 Keeps Pemex as Branded Mogas, Diesel Supplier

April 16, 2018

In Mexico's opening hydrocarbons market and changing retail fuel landscape, Pemex has established a new marketing relationship with fuel retailer PetroMax, which does business as Petro 7, the state-owned company announced.

At about 220 stations, PetroMax ranks third in station-group ownership in Mexico after the G500 network of stations (more than 960) and OXXO Gas (almost 400), according to energy regulatory agency CRE.

"PetroMax is a great ally in the process of change whose main objective is to maintain the preference of consumers for the Pemex brand and products in the new scheme of competition in our country," Pemex said in a statement.

The new medium-term deal demonstrates Pemex's "ability to be competitive for the benefit of customers and final consumers" by providing an innovative experience and guaranteeing quality, the statement added.

OPIS notes that most of those 220 PetroMax stations are still branded Pemex, with around 30 rebranded. Similarly, most of the stations owned by OXXO Gas are branded Pemex with around 40 having rebranded during the energy reforms. Some stations in the G500 gasoline-purchasing group have begun to rebrand but they're doing so at a studied pace given the royalty payments and longer-term supply commitments involved.

The total number of service stations in Mexico is about 11,800 and Pemex continues to dominate. However, in about one year's time a number of integrated oil companies, refiners and trading companies have begun branded retail operations and wholesale businesses in the country. That list includes BP, Glencore, Shell, Andeavor, Valero, ExxonMobil, Chevron, Total and Repsol, several of which have also invested in the construction of sizeable new storage and distribution terminals in Mexico.

On the supply side, foreign trading firms including Vitol, Glencore, Trafigura, Musket, Biourja, GE Warren and Tauber Oil have been increasing their product volumes into the net-short Mexican market, which has been grappling with domestic refinery operational issues due to a lack of funds and expertise.

--Beth Heinsohn, bheinsohn@opisnet.com

Mexico's IEnova to Build Terminal in Baja Calif.; Half Leased by Chevron

April 13, 2018

IEnova plans to develop, construct and operate a 1-million-bbl petroleum marine terminal on the northern part of Mexico's Pacific coast in Baja (B.C.), the Mexican infrastructure company said Thursday.

The $130-million project -- Baja Refinados -- will be located within the La Jovita Energy Center, which is about 14 miles north of Ensenada, B.C. The Sempra Energy company also announced that it had signed a long-term contract with Chevron Combustibles de Mexico S. de R.L. de C.V. for the storage and delivery of petroleum, mostly gasoline and diesel.

The new terminal will allow the oil major to supply its growing network of Chevron-branded fuel retail stations in Baja California, as well as commercial and industrial consumers, the statement said. More than half of Chevron's U.S. refining capacity (about 514,000 b/d) is located at two facilities in California.

The deal with the Chevron Corp. subsidiary allows it to use 50% of the terminal's storage capacity. Another Chevron subsidiary will have the right to acquire 20% of the equity of the terminal after commercial operations begin.

Chevron opened its first gas retail station in Mexico at Hermosillo, Sonora, in late August 2017 and said at the time that it planned to open up to 250 over three years in the states of Sonora, Sinaloa, Baja California and Baja California Sur.

OPIS notes that independent refiner Andeavor's expansion into Mexico began in the country's northwest. After being awarded in summer 2017 partial use of Pemex terminal and pipeline capacity in Baja California and Sonora, Andeavor began opening ARCO-branded retail stations in the region, which currently number about 40, and the company also supplies more than 30 additional stations in Mexico.

Andeavor plans to expand its retail network to 250-300 stores.

The Baja Refinados terminal is seen beginning commercial operations in the second half of 2020. IEnova will be responsible for all aspects of project implementation, including permitting, engineering, procurement, construction, financing, operations and maintenance of the terminal.

--Beth Heinsohn, bheinsohn@opisnet.com

Avant Energy More Than Doubles Investments for Mexican Logistics Projects

April 4, 2018

Avant Energy, a Mexican logistics company, said that it plans to increase its investment in SUPERA (Altamira-Bajio Petroleum Supply System) from $200 million to $500 million.

Luis Farias, Avant Energy's CEO, made this investment announcement at the placing of the first stone of SUPERA, at the maritime terminal of Altamira, Tamaulipas, which Mexico's secretary of energy, Pedro Joaquin Coldwell, and the governor of the state of Tamaulipas, Francisco Javier Garcia, attended.

Avant Energy is a Mexican company focused on the development, construction and operation of energy infrastructure for the oil, natural gas, refined products and power sectors and works on this development with U.S. logistics group Savage Companies and rail operator Kansas City Southern de Mexico as commercial partners.

Farias said that $260 million will be allocated to increase the operating capacity of the terminals that make up the network, while the rest will concentrate on maintaining a strategic inventory of hydrocarbons.

Avant estimates that Altamira project investment will reach $200 million, while in Queretaro, Avant will allocate another $60 million. In addition to the investment in fixed assets, working capital is required to buy and inventory the petroleum products, as well as to give credit to customers. This initial capital is around an additional $250 million, Farias said.

Mexico's energy secretary, Pedro Joaquin Coldwell, said that SUPERA will contribute to increased energy security. "Under the previous model, prior to the energy reform, private investment was limited to modernize and expand infrastructure, which put national energy security at risk, our current inventory level is only three days of sales, well below the world standard that is 30 days," he said.

Avant Energy is backed by capital from Mexican and international institutional investors, managed by affiliates of Riverstone Holdings LLC, an energy focused private equity firm, which include Riverstone's CKD.

OPIS reported in February that Avant planned to build a network of marine and inland terminals for refined products to serve the north-central region of the country. The SUPERA logistics network will include a 1.2-million-bbl marine terminal at the Port of Altamira on the east coast (in the state of Tamaulipas) and an inland terminal to supply several cities in the Bajio region.

The Bajio region includes parts of the states of Aguascalientes, Jalisco, Guanajuato and Queretaro. First operation date for the project was originally set for the end of 2019.

--Edgar Ang, eang@opisnet.com

Mexico's Pemex to Improve Products Yields in Miguel Hidalgo Refinery

March 28, 2018

Mexico is not only making progress in opening up its upstream sector, but it could be slowly attracting international companies to help upgrade Pemex refineries.

The state-owned oil company, Pemex, said that it is requesting bids for rehabilitation works for the H-Oil plant located within the 315,000-b/d Miguel Hidalgo refinery in Tula. Tula is north of Mexico City, in Central Mexico.

The aim of this project is to improve security, performance and profitability of the Miguel Hidalgo refinery, the company said.

Currently, the H-Oil plant processes amounts of pure diesel and produces hydrodesulfurized diesel with low sulfur content, which are sent in bulk to catalytic plants, as well as obtaining other products, like diesel, sour gas, dry gas and acid, according to Pemex.

OPIS notes that a H-Oil plant processes the bottom of the barrel for production of catcracker feedstocks, diesel and naphtha. Also, Mexican refineries have been running at low utilization rates in the past several years due to a lack of investments and upgrades. The low refinery utilization leads to a robust export flow of U.S. products south of the border, which helps to bolster U.S. Gulf Coast refinery margins. However, in the longer run, depending on the progress of Mexico's refinery rehabilitation plans, Mexico may need less fuel from the U.S. It is noted this scenario is not expected to occur anytime soon.

This tender is open to domestic and international companies, and the bidding process will be carried out via the System of Electronic Contracting of Pemex.

Pemex CEO Carlos Trevino Medina said that "since the new judicial framework that the Mexican energy reform brought about, in which there is a mandate to maximize profitability of the company with the incorporation of corporate governance, 84% of today's purchases are done through open request for bids, which leads to a healthy competition between providers and ultimately toward operational savings and increased budgetary efficiency."

This project is expected to be concluded this year.

 

--Edgar Ang, eang@opisnet.com

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