Valero Signs New Deals to Expand Supply Capacity in Mexico

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Valero Energy Corporation sign off 1604 on June 21, 2019.

Stephanie Marquez / Rivard Report

San Antonio-based Valero Energy is expanding its supply capacity in Mexico.

Valero Energy said it has signed long-term agreements to use three new refined product terminals located at three cities in Mexico.

Combined with agreements made in 2017, the new terminal deals provide the San Antonio-based Valero 5.8 million barrels worth of storage capacity to supply refined petroleum products to four of the largest metropolitan areas in Mexico.

Mexico began opening its energy market to competition in 2014 in order to boost oil and gas production, and power electricity generation. The reforms led to U.S.-based companies entering the Mexican fuels market and creating the infrastructure to support those efforts, including the construction of pipelines, storage terminals, and retail gas stations.

The terminals, in Guadalajara, Monterrey, and Altamira, support the company’s goal of expanding its supply chain in that country, Valero said.

Agreements for terminals in Guadalajara and Monterrey will allow Valero to receive refined products via trains and truck loading facilities and serve regional and local markets. Both terminals will be built through joint venture arrangements, and Valero is not contributing any funds toward the projects, according to a statement.

The Guadalajara terminal agreement is with Grupo México and Silos-Tysa and the terminal is expected to provide 900,000 barrels of storage capacity. The Monterrey terminal agreement is with Grupo México, with the terminal providing 425,000 barrels of capacity.

The terminals are expected to start operating in 2021.

The Altamira terminal, which will be funded and constructed by Operadora de Terminales Marítimas (OTM) at the city on the Gulf of Mexico, will give Valero access to a second port facility for imports of refined products. 

That terminal is expected to provide 1.1 million barrels of storage capacity, truck loading facilities to serve local market demand, and rail services for distributing products to inland Mexican markets, including Monterrey.

As part of a marketing plan to expand Valero’s supply chain, Valero is currently selling fuel products through a third-party terminal in Nuevo Laredo, Mexico, and through three rail-to-truck “transload” facilities in Guadalajara, Monterrey, and Chihuahua. Starting in 2020, Valero plans to begin transloading products in Puebla, Mexico. 

In August 2017, Valero signed long-term agreements for three refined product terminals in the ports of Veracruz and Puebla and in Mexico City. All three terminals are under construction and are expected to begin operations next year.

Valero also signed an agreement with rail company Ferromex, which is owned by Grupo México, to transport refined products throughout Mexico.

The storage capacity provided through the six new terminals, along with Ferromex rail transportation services from the port facilities in Veracruz and Altamira, will supply four of the largest metropolitan areas in Mexico as well as smaller fuel markets throughout the country.

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