Mexico’s Retail Fuel Revolution

 

Did you know that Mexico is the world’s sixth largest consumer of retail fuels? With demand well in excess of the country’s domestic production capability, Mexico imports an estimated 425,000 barrels of gasoline every day. So where does the country’s fuel come from? In the near future, a significant portion will come from private companies in the United States.

Last February, Mexico’s Energy Ministry effectively ended the country’s longstanding state monopoly on retail fuels when it announced that private parties would be allowed to supply gasoline and diesel to Mexico beginning April 1, 2016. Prior to this, all refining, importing, and exporting was overseen by Pemex, Mexico’s state-operated oil company. Since then, 28 import permits have been awarded to non-Pemex suppliers, as Mexico kicks off a two-year transition to a free market system for retail fuels.

Back to our earlier question: Where does Mexico’s retail fuel come from? Currently, 48 percent of Mexico’s fuel comes from outside the country, and some analysts project that number will increase to 60 percent by 2020. Demand will continue to grow, and increasingly, petroleum-based fuels will be brought into Mexico from other countries. These fuels will be transported by ship, truck, and pipeline—and much of them will pass through the Port of Brownsville.

Brownsville is located at the southernmost tip of Texas and is connected to the Gulf of Mexico by a 17-mile ship channel. Located near the U.S.-Mexico border, the Port of Brownsville is uniquely positioned for trade between the two countries. Last year, more than 10.1 million tons of cargo came through the port, up from 8.4 million tons the previous year—and Brownsville is positioning itself for future growth, as Port officials explore a project to deepen the channel to 52 feet.

One Cypress Energy currently hosts eight storage tanks at the Port of Brownsville, including six-12,500 barrel tanks with floating roofs and two larger tanks that are heated and coiled. With a total capacity of approximately 120,000 barrels of storage and room to grow, One Cypress Terminals at the Port of Brownsville is an ideal partner for firms trading in Mexico.

Although the full economic impact of deregulation remains to be seen, one thing is certain: The Mexican retail fuels revolution presents a bold opportunity to grow value in an otherwise stagnant energy landscape. Let One Cypress Terminals help you stake your claim on this untapped market.

What are your thoughts on the Mexican fuels market? Leave your comments below or click here to learn more about One Cypress Terminals.

All the Best,
Scott Phipps