ExxonMobil To Increase Refined Products Deliveries In Mexico
Zacks Investment Research | May 21, 2018 07:47AM ET
ExxonMobil Corporation (NYSE:XOM) plans to boost refined products deliveries in Mexico starting this summer. The company will start supply to the greater Mexico City region and the states of Coahuila, Nuevo Leon and Puebla.
Unit train delivery on the Kansas City Southern (NYSE:KSU) system will be used to supply to these markets. Mexico is turning out to be an attractive region for refiners and midstream players as they compete for market traction in the region. Among several other recently planned projects, Valero Corporation (NYSE:VLO) announced the signing of a deal to supply Mexico's northern region via NuStar's midstream infrastructure.
ExxonMobil already supplies about 362,300 barrels per day (bpd) by unit trainfrom its refinery based in Beaumont, TX, to as far south as San Jose Iturbide, Guanajuato state. Since the beginning of 2018, ExxonMobil imported 900,000 barrels of fuel to train terminals in the city of San Luis Potosi and San Jose Iturbide.
ExxonMobil’s product delivery expansion into Puebla toward the south and further west into Coahuila will grant the company access to the heavily populated Mexico City and Monterrey areas.
ExxonMobil is a major customer of the new terminals developed by Bulkmatic terminals. The company’s expansion strategy is in sync with its plan to invest $300 million in logistics, inventory and marketing efforts in Mexico over the next 10 years. The country’s growth and accessibility to infrastructure will decide the volume of fuel the company will export in the region.
Per ExxonMobil’s estimates, Mexican fuel demand will grow 40% over the next 25 years while the same in the United States will drop 17%.
In Mexico, Monterrey and Mexico City are considered to be the most valued fuel markets along with Guadalajara. Per government data, Pemex terminals in the greater Mexico City area recorded total gasoline and diesel sales of more than 162,000 bpd in 2017. Of which, Pemex's terminals in Monterrey alone distributed more than 98,000 bpd of fuel. During the same period, Pemex sold about 36,000 bpd of fuel in Puebla and more than 19,000 bpd of fuel in Coahuila.
ExxonMobil intends to rebrand stations in the greater Mexico City region and is negotiating retail agreements. However, sanctions and land-cost issues have prohibited the construction of new retail outlets in the Mexico City region.
Per Mexico's Energy Regulatory Commission, Mexico City had 361 retail stations in 2017.
ExxonMobil intends to enter Mexico not as a fuel wholesale supplier but as a retailer. The company has presence in Guanajuato, Queretaro and San Luis Potosi. The company will open stations in Puebla, Aguascalientes and Zacatecas states during the summer.
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