Storage: The Missing Link in the Fuels Market

Mexico has limited access to liquid fuels points of supply: import points and refineries. The country faces daily a challenge  for transportation because several major consumption points are far from supply. Storage can provide relief to these  problems, because it increases energy security and provides liquidity on markets by stabilizing the impact of  volatility on supply and demand.

Within this environment, storage becomes the distribution center needed to reach every corner of the country.  The remaining question is whether Mexico has enough operating and planned storage to cover all demand.


STORAGE CAPACITY IN MEXICO

At the beginning of 2020, 92 fuel storage terminals provide service in Mexico (85% belong to Pemex, while private   parties own the rest). These terminals have an operating capacity of almost 31 million barrels, that represents  approximately 25 days of demand (2019). However, not all the capacity is being used and its dispersal is not efficient  to attend all consumption points properly.
Storage capacity

Four states concentrate more than fifty  percent of the gross storage capacity in the  country: Veracruz, Michoacan, Baja  California, and Sinaloa.
The Energy Regulatory Commission (CRE)  has granted storage permits to 30 firms,  but most of them have not started  operations. Most of this new storage will  be installed in Veracruz, Colima, and  Estado de Mexico and shall add 18 million  barrels of capacity.


STAKEHOLDERS INTERESTED IN SIGNING CONTRACTS FOR STORAGE USE:



  • The Ministry of Energy granted more than 200 import permits during 2019 whenever the request was properly filed  from a regulatory standpoint.
  • States that concentrate most of the gas stations are Estado de Mexico, Jalisco, and Veracruz, whilethestates with  more registered vehicles are Estado de Mexico, Mexico City, and Jalisco.
  • Mexico has fewer gas stations per cars than the rest of the region and represents a major opportunity to host more.
  • This developing market also shows signs that further storage capacity is needed on different zones of the country:
    the existing and expected storage capacity will not be enough to attend the expected demand for the following decade.


Market participants in Mexico would benefit from a deep analysis of storage facilities, which should consider: i)  available capacity in current infrastructure; ii) future capacity in infrastructure under development –expected date of  conclusion, capacity, etc.–; iii) supply coverage –proximity to consumer centers and supply points–; iv) interconnection to  transportation modes, and v) current regulation loopholes. This will allow to improve its logistics performance, as well  as to have enough resilience to increase their portfolio of clients and manage risks.


Sources:
Anuario Estadístico Ferroviario, 2018. Agencia Reguladora del Transporte Ferroviario
Sistema Portuario Nacional. SCT
Sistema de Información Energética. SENER
Registro Público de Permisos. CRE
Registro Público de Permisos. SENER
Prospectiva de petróleo crudo y petrolíferos 2018-2032. SENER




POTENTIAL PARTNERS FOR LOGISTICS

A topic for consideration is the transportation of products from the supply points to the storage,  and the consumption centers.
Each transportation vessel has operational and  commercial advantages and properties.  Below, we review two sectors with high potential  for further investment.

RAILROADS

Trains are an excellent alternative to transport  large volume of fuels, mainly due to the current  security situation with pipelines. Mexico has  over 23 thousand kilometers of operational  railroads throughout the country. Many of  which have access to import points on the  border or marine ports.

PORTS

Due to the geographical conditions and long  distances between import points and  consumption centers, marine infrastructure
is fundamental for supplying the whole country.
Mexico has 117 ports (various capacities):  59 on the Gulf of Mexico and 58 on the Pacific.