NuStar Energy LP of San Antonio and Petroleos Mexicanos (Pemex) affiliate PMI plan to develop pipeline infrastructure to carry liquefied petroleum gases (LPG) and refined products from the United States to Mexico. The joint venture (JV) is a response to reforms that have opened Mexico's energy industry to private investment.
"This landmark alliance is one of the very first commercial agreements between energy companies from the U.S. and Mexico to create a JV focused on infrastructure, and it resulted from Mexico's recently enacted energy reforms, which call for major investments in energy infrastructure and attracting foreign investment in Mexico's energy sector," said PMI Director General Jose Manuel Carrera.
The companies plan to jointly fund construction of pipeline and storage assets; NuStar would manage construction and operation of the assets. LPGs and refined products would be delivered from Mont Belvieu and Corpus Christi in Texas to Nuevo Laredo and Burgos-Reynosa in Mexico.
The new pipeline and terminal facilities are to be integrated with NuStar's existing pipeline infrastructure, and the project would be supported by a throughput commitment from PMI, the partners said. The projects are expected to be in service during the second half of 2016.
NuStar and PMI previously partnered to transport propane into Mexico, but this is the companies' first JV together. It would give PMI access to multiple LPG and refined products supplies in major Gulf Coast refining centers, Carrera said.
"Because the agreement primarily involves pipeline transportation of the products into Mexico, it would result in more efficient, clean and reliable transportation of refined products and LPGs between the U.S. and Mexico by reducing the amount of petroleum products transported by truck across the border," he said.
PMI trades crude oil, petroleum products and petrochemicals worldwide and has operations in more than 20 countries. It also operates midstream assets in Mexico and the United States.
"This is an ideal partnership that would bring together PMI's vast presence in Mexico's oil and gas market and NuStar's logistics expertise and resources to provide a stable supply of LPGs and refined products to meet the significant demand in Mexico," said NuStar CEO Brad Barron.
Earlier this year, Mexico enacted reforms intended to open its energy sector to private investment (see Daily GPI, Oct. 8; Aug. 14; Aug. 7).