Mexico must grow fuel production capacity

Bnamericas Published: Thursday, May 19, 2016
Mexico must grow fuel production capacity

Mexico must increase its fuel production capacity and strengthen its logistics network for storage and distribution to remain competitive, according to an energy ministry (Sener) fuel industry diagnostics report published this week.

Sener said the findings are a useful tool for planning projects to develop the sector, as supplying high-quality fuel is essential to the country's industrial and economic development, along with investment to eliminate bottlenecks and increase storage, transportation and production capacity.

Among the report's findings, it states that annual growth in domestic demand for gasoline, diesel and kerosene has averaged 1.5% over the last five years but is expected to increase to 2.7% for gasoline and 3.6% for diesel by 2029, making the expansion of capacity for the supply of fuels an urgent task.

However, despite demand for fuel products in 2015 growing by just 0.1% compared with 2014 to 1.4Mboe/d, gasoline imports increased by 15% during the year to 426,600b/d, while kerosene imports increased by almost 96% to 23,500b/d compared with the previous year. Kerosene demand in 2015 was 70,800b/d, up 6.5% on 2014.

Total fuel production in Mexico in 2015 fell by 6.8% year-on-year to 1.09Mb/d, while imported fuels accounted for 45% of the fuels consumed in the country in 2015.

Domestic demand for fuel oil dropped by 8.5% during the year to 111,400b/d however, as state utility CFE switches to natural gas for power generation.​

Mexico has six oil refineries with a total processing capacity of 1.61Mb/d, the report states. Of the six refineries, three have undergone upgrades, the most recent, in Minatitlán, in 2011, while an upgrade of the Salina Cruz refinery, which opened in 1979, is currently in the planning stage.

Mexico postponed a planned refinery refit program in February 2015, citing its US$4.16bn budget cut.

The country's refineries saw 66% utilization in 2015, below the 71% five-year average, the report states. The Tula refinery achieved the greatest usage, with 75% during the year, while the Minatitlán refinery recorded the lowest, with 53%.

The six refineries' total crude oil processing capacity fell in 2015 to 1.06Mb/d from 1.15Mb/d in 2014, a 7.8% drop.

The report also contains an inventory of Mexico's transportation, storage and supply infrastructure.

The country has 73 storage terminals with total capacity of 17.3Mb, five maritime fuel terminals, 66 fuel transport pipelines and 11,431 gas stations serving motorists.

As part of Mexico's energy reform allowing private firms to participate in the import and sale of fuels, Sener has already granted permits to private firms to import gasoline and diesel, as state oil firm Pemex's market monopoly comes to an end.

Among the firms granted permits to import fuels are Forza Combustibles, Petrorack, Combustibles Veral, Petrovim, Trafigura, Puma Energy and two railroad operators, Ferrocarril Mexicano (Ferromex) and Kansas City Southern, which will import diesel. Five mining companies have also been granted import permits, including Minera Real de Angeles, Minera San Francisco del Oro and Ocampo Mining.

The report is available online, in Spanish.

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