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Valero announces deal to supply refined products to northern Mexico

The day after Valero Energy Corp. announced it had acquired the third-largest Peruvian petroleum products importer, the company said it had secured through a subsidiary a long-term contract to supply refined products to northern Mexico. The deal echoes the U.S.-based petroleum refiner's strategy of securing market share in a growing Latin American fuels market.

Valero said May 15 that through the agreement, entered into by its subsidiary Valero Marketing and Supply de Mexico, S.A. de C.V, it expects to begin delivering fuels produced at its Corpus Christi and Three Rivers refineries in Texas via pipeline to a terminal in Nuevo Laredo, Mexico by year's end.

The terminal, owned by NuStar Energy LP, currently has a storage capacity of 34,300 barrels and a three-bay truck loading rack, according to the midstream company's website. NuStar announced April 26 it was expanding the terminal, but did not disclose the project's scale.

"This agreement is another step in our strategy to extend Valero's supply chain," Valero Senior Vice President of Marketing and Supply Gary Simmons said. "This transaction combined with our agreements to supply central Mexico demonstrates our commitment to efficiently supply gasoline and diesel to the growing Mexican markets and will further strengthen our distribution presence, including branded sales."

Valero also said through long-term agreements it announced in August 2017 with Sempra Energy subsidiary Infraestructura Energetica Nova S.A.B. de C.V. to import refined products into the Port of Veracruz, it will have exclusive use of a terminal at the port with a 2.1 million barrel storage capacity as well as two inland storage terminals located near Puebla and Mexico City that will be supplied by rail.

IEnova expects the Veracruz terminal to begin operations by the second quarter of 2019 and that the inland terminals will come online in the following quarter.