That is the wide-angle conclusion of an expert in Mexico logistics and storage who himself is engaged in a pioneering storage project.

The need for a major storage building program arose a year ago when Mexico applied for membership in the International Energy Agency (IEA) on Nov. 16, 2015. It turns out that the IEA is closely allied with the Organization for Economic Cooperation and Development (OECD), but not all members of the OECD are IEA members. To apply for membership in the IEA, a country must first be an OECD member. Mexico joined OECD in 1994 and now seeks to take the next step and join IEA.

Joining the 29 members of the IEA is not easy. At the moment there are two OECD members actively engaged in meeting the requirements: Mexico and Chile. In addition, three countries — China, Indonesia and Thailand — have upgraded to “Association status” within the IEA. Association status is the key preparatory stage to filing a formal membership application.

There are four key requirements to gaining IEA membership, but the one that stands as the imposing roadblock is this: A country must have 90 days’ storage capacity of its cumulative crude or refined product imports in the previous calendar year.

In Mexico, how much is that? Assuming that most of Mexico’s imports come from the U.S., OPIS consulted Energy Information Administration (EIA) data in the 2015 Petroleum Supply Annual for last year’s averages. In Table 32, we find that Mexico imported 330,000 b/d (330 kbd) of gasoline and blending components, 142 kbd of ultra-low sulfur (ULS) distillate, 50 kbd of jet fuel and resid, for a grand total of 522 kbd. Ninety days’ storage of that quantity comes to 47 million barrels in reserve.

Mexican imports of U.S. refined products are up sharply across the board in 2016. Year-to-date average imports in September’s Petroleum Supply Monthly, Table 52, came to 404 kbd of gasoline and blending components, 162 kbd of distillate, 63 kbd of jet fuel and resid, for a grand total of 629 kbd. That total is up 20.5% from 2015, and would entail 57 million bbl of storage capacity, 10 million bbl more than last year’s number.

Mexico has six refineries, and the vast majority of storage in the country is simply tankage at the refineries in direct support of refinery operations. Very little of this would be serviceable as any kind of reserve to back the country up in the event of a supply emergency. That is the concept behind IEA’s 90-day reserve requirement, and in that light, it can be said that Mexico basically has no product reserves.

What could trigger the massive nationwide storage buildout that would qualify Mexico for IEA admission? Pemex is broke, in the sense of having no capital in reserve, and Mexico as a whole is struggling to keep its head above water and keep Pemex solvent.

Our visionary logistics expert points to the companies that signed up (and paid up) to join Pemex as partners in developing the deepwater reserves. “Look who Pemex has got for partners now,” he says. “In the Trion block, BHP Billiton has come in as 60% owner and operator. In Perdido Block 3, Pemex is partnered with Chevron as operator and Japan’s Inpex Corp. as the third partner.”

And there’s more. The auction included four “exploratory blocks” in the Perdido Fold Belt at the U.S./Mexico maritime border. These blocks surround Trion field, and are exploratory simply in the sense that no drilling has ever occurred in these areas.

In three Perdido blocks, Pemex isn’t even present as a partner. Chinese National Offshore Oil Co. (CNOOC) took Perdido Blocks 1 and 4 all on its own. Perdido Block 2 went to a partnership of Total E&P Mexico and ExxonMobil.

The point is, says our expert, these companies are used to the downstream infrastructure needed to convert wellhead production into marketable products. They will not sit idly by with production ready to flow and nowhere to take the production for downstream processing and sale.

Considering that the Perdido blocks are 120 miles east of Matamoros alongside the maritime border, the oil will be coming ashore at a point far from the nearest refineries. Those would be the 292,000-b/d Cadereyta refinery 40 miles east of Monterrey, and the 190,000-b/d Ciudad Madero refinery at Tampico.

If Perdido area production comes on as hoped in the 2025-2030 period, that will entail a tremendous amount of downstream infrastructure just to get the production to those refineries. And the refineries would probably require major upgrades and expansions to handle the Perdido volumes. All along the supply chain, there will be the need for high-volume storage between each of the downstream stages.

Before that production is ready to flow, predicts our expert, Mexico will be engaged in a nationwide storage buildout that will push it toward the threshold required for IEA membership.