MEXICO INCREASINGLY DEPENDENT ON U.S. REFINERIES:
U.S. Gulf Coast refiners are cashing in on rising fuel demand from Mexico, shipping record volumes to a southern neighbor that has failed to expand its refining network to supply a fast-growing economy.
The fuel trade could top a million barrels per day (bpd) at times in 2017 as Mexico becomes increasingly dependent on the United States for strategic energy supplies and providing business worth more than $15 billion a year to refiners such as Valero (VLO.N), Marathon Petroleum (MPC.N) and Citgo Petroleum.
The rise in Mexico’s fuel imports reflects an economy that, after expanding for 27 quarters in a row even amid a public austerity plan, has been unable to increase its refining output to satisfy the consistent growth of its energy demand.
It has led to rapid reversal in energy trade between the two countries. In 2016, crude exporter Mexico will be a net oil importer from the United States for the first time as shipments of refined fuel heading south outnumber shipments of crude to the north, according to the U.S. Energy Information Administration (EIA).
PEMEX’s budget cuts have affected refining operations : “Refineries in Mexico are running at about 60 percent of their 1.576 million bpd of capacity, according to the company’s data.”
In 2014 PEMEX refineries were running at 79 percent of capacity. It appears mismanagement and short-sighted government policy have also contributed to the problem.