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Interview: Executive says Shell to start fuel imports by ship into Mexico in mid-2020

Houston — Shell plans to start importing fuel to Mexico ship by the middle or second half of next year, as soon as two new private terminals come online, according to Murray Fonseca, Shell downstream director for Mexico.

The first cargo of fuel, from Shell's 340,000 b/d refinery in Deer Park, Texas, on the Houston Ship Channel, arrived by train to a private terminal in the Mexican state of Guanajuato in early October, Fonseca said in an interview with S&P Global Platts. Shell co-owns the refinery in a 50-50 joint venture with Mexico's state-owned Pemex.

However, Shell cargoes by ship will start once private terminals in Tuxpan, on Mexico's East Coast, and Tula, in Mexico's central region, become functional, Fonseca said. The terminals are expected to be operating by mid-2020.

"We are waiting for marine terminals infrastructure to be functional," Fonseca said. "We will start bringing marine cargoes to the Tuxpan-Tula terminal system once those terminals are up and running."

Invex, a Mexican financial company with investments in infrastructure projects, is building the Tajin system, which will consist of a terminal in Tuxpan, with an initial storage capacity of 1.4 million barrels, and another terminal in Tula, with an initial capacity of 1.2 million barrels.

The project also includes a 265-km pipeline between Tuxpan and Tula that will have a capacity to move up to 330,000 b/d.

"[The pipeline] has had a slight delay, but the system can still be active without the pipeline because we could use primary transport between the two terminals and then take the fuel from the Tula terminal by highway to the gas stations," Fonseca said. Once the terminals are ready, Shell will be ready to import by ship, he explained.


Shell is analyzing other options for terminal offtaking on Mexico's Pacific Coast and in the north of the country, he added.

Shell's first rail cargo of its own fuel combined Magna and Premium gasoline, as well as ultra low sulfur diesel. Mexico's Magna gasoline has a minimum 87-octane specification, while Premium gasoline has a minimum 92-octane spec.

For the time being, Shell will keep using unitary trains, with a 65,000-barrel capacity, as well as trucks to mainly supply its service stations in El Bajio, a highly populated region comprising several states on Mexico's Pacific Coast and central area .Imports will start supplying only around 25% of the demand of Shell's El Bajio stations.

Shell now has 200 service stations in 12 Mexican states, but it expects to expand its network to 15 states with 1,200 stations in the next five years.

Fonseca said Pemex will still be an important Shell partner as supply flexibility is needed in Mexico.

The imports gap, which has increased in the last few years in Mexico, will hardly be closed, as domestic production capacity will not be able to pair with demand that is rising alongside a more robust middle class, Fonseca said.

"I think this is something all companies are looking at," he said, referring to fuel imports into Mexico.


The most recent monthly data from Mexico's energy ministry have shown retreats in production, imports and sales in the country.

In September, Mexico imported 514,044 b/d of gasoline, down from 579,176 b/d in August and its lowest monthly imports in 2019. Of September's volume, 83,748 b/d, or 16.29%, was imported by private companies, while 430,000 b/d was imported by Pemex.

Diesel imports in September totaled 227,970 b/d, also the lowest level so far this year and down from 249,342 b/d in August. Of September's barrels, 31.30%, or 71,361 b/d, corresponded to imports by private companies, while 156,609 b/d were imported by Pemex.

However, Mexican production of gasoline also fell in September also fell, to 203,141 b/d from 226,475 b/d/ in August. September production was the lowest level since 199,864 b/d in April.

Diesel production in September averaged 134,205 b/d, down from 144,637 b/d in August and the least volume of output since 132,805 b/d in April.

September gasoline sales fell to 688,524 b/d, from 721,846 b/d in August, and the lowest registered this year. Diesel sales were parrallel, averaging 270,336 b/d in September, down from 294,722 b/d in August, and also at their lowest level in 2019.

-- Silvia Struthers,

-- Edited by Richard Rubin,