What a supply chain -
"Pemex will examine market conditions in the second half of the year, when India is expected to complete a new oil refinery that could take in Mexican crude and ship back refined fuel."
Mexico mulling buying fuel from far-off India
Wed Feb 13, 2008
Catherine Bremer
MEXICO CITY (Reuters) - Mexico, a major oil exporter but an importer of refined fuel, is mulling buying gasoline from faraway India if prices there undercut costly U.S. refineries, state oil monopoly Pemex said on Tuesday.
Pemex will examine market conditions in the second half of the year, when India is expected to complete a new oil refinery that could take in Mexican crude and ship back refined fuel.
"It's being evaluated and it will depend on price levels," said Pemex spokesman Carlos Ramirez.
Dogged by a lack of capacity at its six refineries, Mexico has been a net fuel importer for several years and currently buys a hefty 40 percent of its fuel from U.S. refineries.
Pemex currently exports an average of 35,000 barrels per day (bpd) of crude across the Pacific Ocean to India.
Its trading arm believes shipping back Indian gasoline could prove cheaper than piping or trucking in fuel from the United States, which buys 80 percent of Mexico's exported oil.
Mexico recently stopped shipping oil to U.S. West coast refineries, a decision based on port infrastructure and costs. Pemex said at the time that it would ship crude to other markets where there were better economic alternatives.
Even if India proves a cheaper option, the process of exporting oil to overseas refineries only to buy back expensive refined fuel hurts Mexican industry and the government, which subsidizes gasoline for motorists.
Mexican officials have repeatedly said a new refinery is needed, but there is no concrete plan yet to build one.
Pemex has spent the past 10 years upgrading its six refineries to improve output capacity. Work at the Tula, Madero, Salamanca and Cadereyta plants is complete and Pemex is working on its Minatitlan and Salina Cruz refineries.
The world's No. 5 crude oil producer by volume and a major U.S. supplier, Mexico produces around 450,000 bpd of gasoline but consumes 750,000 bpd, and the latter figure is growing.
Ruling party Sen. Ruben Camarillo told Reuters last month that Mexico could save billions of dollars a year if it could refine all its fuel. Camarillo and other Senators are debating a new energy law which could permit monopoly Pemex to form partnerships on Mexican soil in areas like oil refining.
Pemex has a 50 percent share in Shell Oil's Deer Park refinery in Texas, but many lawmakers would like to see a refinery joint venture on Mexican soil. Shell Oil is the U.S. unit of Royal Dutch Shell Plc. |
