OPIS (Oil Price Information Service) by IHS Markit is the first price reporting agency to calculate implied wholesale gasoline and diesel rack costs in the Mexican fuel market. Offering 2 new price discovery options, you'll be able to get unprecedented price transparency in Mexico's changing fuel markets. 

The OPIS Mexico Fuels Report features landed spot fuel market index and critical news analysis and OPIS Mexico Racks provides retail, implied and posted wholesale pricing in the developing Mexican gas and diesel market with daily rack prices at all terminals in Mexico. 

Rely on OPIS for accurate and transparent price discovery necessary to seize opportunities and tackle challenges across the border. Read on for the latest news....

Shell to Begin Waterborne Fuel Imports in Mexico in H2 2020: Executive

November 11, 2019

MEXICO CITY -- Shell expects in the second half of 2020 to begin waterborne fuel deliveries in Mexico via the Port of Tuxpan in the country's east coast, a company executive told OPIS.

The company will move product into Tula in Central Mexico via this new position in Tuxpan, said Murray Fonseca, Shell Mexico's downstream lead.

"How much fuel we import will depend on demand, our number of service stations, and our future terminal capacity," Murray said in an interview.

The company began its first fuel imports into Mexico in September, bringing 66,000 bbl (2,200 b/d) of diesel as well as regular and premium gasoline into San Jose Iturbide, Guanajuato.

"That first train shipment was a historical moment for Shell as it was our first fuel import into Mexico," Murray said.

The company expects to import two unit trains per month, he added. A unit train can carry from 50,000 to 100,000 bbl.

"We will see a ramp-up in imports over the coming months," said Fonseca, whose company is moving fuel from Houston using Kansas City Southern's rail network.

A Spot Bajio Fuel Market?

When asked if a spot market could emerge in Mexico's west-central region, Fonseca answered there is a possibility, but it will depend on many factors.

"In the end, all this would be speculation," he added.

In addition to Shell, majors Total, ExxonMobil and Valero are moving product into the west-central region, also known as Bajio.

Fonseca said that private fuel imports would accelerate next year once the new infrastructure is completed. "Companies are looking at opportunities to improve Mexico's logistic system," he added.

"We can play with swaps and tickets. This will happen in the medium term, but first, the infrastructure has to be completed," Fonseca said.

According to data from Mexico's Energy Regulatory Commission (CRE), there are 38 terminal projects under construction with a combined 26-million-bbl in storage capacity.

Rail to Remain Critical for Bajio

Once new terminals come online, the methods of transportation to move product into Mexico will diversify, Fonseca said.

Railway will play a role in supplying products into Mexico in the medium-term as marine terminals and, eventually, pipelines are developed. "Today, the options to import fuel are limited," Fonseca said.

"However, at Bajio, it will be more efficient to bring product via rail rather than trucking it from marine terminals," he added.

Moving production in truck beyond a 200-km radius from marine terminals becomes very inefficient, Fonseca said.

According to PIERS by IHS Markit, private companies imported 2 million bbl of gasoline and diesel into Mexico in September using trains, which is 9% of all fuel imports.

Private companies also imported 1.4 million bbl of fuel using marine vessels and 1.1 million bbl using trucks in September, PIERS shows. This is 11.5% of all fuel imports.

The Rules of the Game Continue

Fonseca sees fuel market liberalization continuing under President Andres Manuel Lopez Obrador. "The foundations, the games of the rules continue in Mexico," he said.

The executive said that Lopez Obrador's administration is introducing general policy and regulatory changes to Mexico's fuel market, but none are significant concerns.

"For me, there haven't been any concern signs," Fonseca said.

When asked about recent changes to Pemex's bulk discount program and its plan to create and operate a new network of retail stations, Fonseca said he welcomed initiatives from competitors as long as they  "create healthy and loyal competition."

Economic Stagnation Hit Fuel Demand

Mexico will probably end the year with a slight decrease in fuel demand amid the economic stagnation the country is experiencing, Fonseca said.

"Due to the fuel supply problems in January ... the demand profile for this year is a bit unusual," he added.

According to the country's National Statistical Institute (INEGI), Mexico's GDP did not grow during the first months of 2019.

Going forward, Shell expects fuel demand in Mexico to continue growing over the next five years along with its middle class, car-ownership rate and income levels.

--Daniel Rodriguez, daniel.rodriguez@ihsmarkit.com

Copyright, Oil Price Information Service

Mexico Restarted US Crude Oil Imports in July: EIA

October 8, 2019

MEXICO CITY -- Mexico imported 500,000 bbl (17,000 b/d) of crude oil in July, the first time since President Andres Manuel Lopez Obrador took power in December, data from the U.S. Energy Information Administration revealed on Tuesday.

Pemex imported 11,000 b/d in October and 23,000 b/d in November of U.S. Bakken leigh shale crude oil from Phillips 66, the first time the company has done so in recent years.

The restart of light crude oil imports could significantly help Pemex increase its refinery utilization rates at three of its refineries, which have a single configuration, preventing them from efficiently processing Mexico's heavy Maya crude oil blend.

These three facilities, 330,000-b/d Salina Cruz, 315,000-b/d Tula and 220,000-b/d Salamanca refineries, produced over 120,000 b/d of fuel oil in August, representing a 35% residual yield, the company's institutional database (BDI) reveals.

Amid a decade-long decrease in output, Pemex's availability of light crude oil has fallen significantly, affecting its single configuration refineries.

Pemex produced 607,000 b/d of light and super light crude oil in August, down from 1.03 million b/d three years ago, the company's DBI reveals.

According to a study from the previous administration of President Enrique Peña Nieto, by only processing light crude, Tula would cut its fuel oil yield by half to 15% compared with processing a blend with 20% Maya heavy crude.

if Tula had only processed light crude oil in 2014, it would have doubled its variable refining margin to $8/bbl, according to the study.

By running a light crude low in sulfur such as the Louisiana Sweet or the Shale Bakken, Pemex would cut its high-sulfur fuel oil output. This would protect the company's refining variable margin of marine fuel specification changes to be implemented in 2020 by the International Maritime Organization (IMO).

Pemex has no funds in place to import crude at its proposed 2020 budget.

However, the company could implement swaps to increase the availability of light oil in its refineries.

Lopez Obrador previously criticized the strategy from his predecessor President Enrique Peña Nieto's administration of importing light crude to boost Pemex's refining margins.

The president said via Twitter in October 2018 that Pemex's light crude imports were additional "proof of the great failure the neoliberal policy... had over the last 30 years."

However, Lopez Obrador changed his rhetoric in January, saying that his administration is assessing importing light crude to process at Pemex's refineries when it was more profitable than buying finished fuel products.

--Daniel Rodriguez, Daniel.rodriguez@opisnet.com

Copyright, Oil Price Information Service

Shell Begins Importing Fuel Into Central Mexico Using Trains

October 1, 2019

MEXICO CITY -- Shell unloaded its first unit train gasoline shipment into western Mexico on Tuesday at Grupo SIMSA's 695,000-bbl terminal at San Jose Iturbide in Guanajuato state.

As a result, Shell will be able to supply 25% of the fuel demand of its retail stations in the Bajio region. The company has 48 operating stations at Guanajuato, and it is in the process of opening 12 new stations at the moment.

With this milestone, the Anglo-Dutch company joins the club of private companies importing gasoline into Mexico, which includes BP, ExxonMobil, Glencore, Marathon Petroleum, Total, Valero and Windstar.

Private companies were behind 13% of Mexico's gasoline imports in July, according to data from the Mexican government, up from 3.5% a year ago. Companies have been able to gain market share by using unit train deliveries as new marine terminals are under construction.

The company has plans to do waterborne fuel imports into Mexico. However, it didn't say how in a statement released Tuesday.

Shell has at the moment nearly 200 stations across 12 states. It has the plan to create a retail network of over 1,200 stations in Mexico over the coming years underpinned by a $1 billion investment over the next decade for new infrastructure.

"Importing our fuel is a fundamental part of our value chain, and it represents an essential factor to support our growth plans in Mexico over the coming years," said Murray Fonseca, Shell Mexico's downstream director, in the statement.

The company will balance its imports with fuel purchases with domestic partners to ensure supply to its retail stations, Shell said. In the past, the company has said it has a supply contract in place with Mexico's state-owned crude oil company Pemex.

--Daniel Rodriguez, drodriguez@opisnet.com

Copyright, Oil Price Information Service

Mexico's Pemex Expects to Start 2020 Producing 1.8 Million B/D of Crude Oil

September 24, 2019

MEXICO CITY -- Pemex expects to start 2020 with a production of 1.83 million b/d as it brings new wells online at several shallow water and onshore oil fields, the company's CEO said Tuesday.

"We stopped the production decline, we stabilized it, and we are starting to increase it," Octavio Romero Oropeza said during President Andrés Manuel López Obradordaily press conference.

Pemex so far this year has produced on average 1.69 million b/d of crude oil.

The company produced 1.62 million b/d in January, the lowest level in decades after it had to shut down production due to its inability to load product at ports amid bad weather.

The state oil company expects to bring 100,000 b/d of new production by December as it brings new wells at the Xikin, Xibic, Valeriana, Quesqui, Chejekbal, Manik, Ixachi, Mulach, Cheek, Pachil, Hok, Tlacame, Yaxche and Tetli fields.

On average, Pemex is expected to have a monthly average production of 1.778 million b/d in December, according to a presentation showed by Oropeza.

Pemex's production will decline in early October as it carries programmed maintenance work at its Yuum K'ak Naab floating production, storage and offloading (FPSO) unit at Campeche Bay as well its shallow water Cantarell complex.

As a result, the company will stop producing 1 million b/d of heavy crude oil for the first week of the month. This will be reflected as a monthly average decrease in the production of 33,000 b/d for October, he added.

Pemex expects to increase its hydrocarbon reserves in 2019, the first time it does in 15 years. It will end the year with 2 billion boe of new proven and possible (2P) reserves as well as 200 million boe of new proven (1P) reserves, he added.

The company expects to close 2019 with 7.2 billion boe of 1P reserves, and gradually increase this to 8.4 billion boe by the end of President Lopez Obrador administration in 2024, he added.

--Daniel Rodriguez, drodriguez@opisnet.com

Copyright, Oil Price Information Service