Mexican Pacific Port of Lazaro Cardenas Eyes Boosted Oil Product Storage Capacity
07.27.2017 - NEWS

July 27, 2017 [Platts] - The Lazaro Cardenas, Mexico, port commission plans to launch an open season in August for developers interested in building additional storage for imported gasoline, diesel and fuel oil, a port official has told S&P Global Platts.


Located in the Pacific Coast state of Michoacan, the port will conduct a feasibility study about adding a 1.5 million-barrel storage terminal, Jaime Ramirez Jaime, the port commission’s planning director, said in a telephone interview on Tuesday.

Approval from Mexico’s Federal Competitive Commission for the study is pending, Ramirez said.

The move follows a formal proposal from an unnamed private developer to build a storage terminal at the port, Ramirez said. Projects proposed by private companies at government-run ports must go through an open season to allow others to compete, he said.

“Despite this terminal being a private initiative, we have to auction it, so all companies have the opportunity to use assets of the nation and avoid creating monopolies in the country,” Ramirez said.

Other companies have less formally requested space at the port for additional install fuel, so the port decided to carry out the feasibility study, Ramirez said.

“The market needs to figure out where it is more feasible to import fuel to compete against domestic production,” Ramirez said.

Mexico has grown increasingly reliant on imported refined products, as consumption has grown while the country’s refineries have been running below capacity.

The Lazero Cardenas port, which handles refined products from state Pemex’s Salina Cruz refinery, currently has fuel storage with an operational capacity of 635,660 barrels, according to Mexico’s Energy Secretariat. The 300,000 b/d Salina Cruz refinery is the largest in Mexico. It is expected back online July 30 after being down since mid-June fire.

Rail Link

Ramirez said Pemex distributes fuel from the port via Kansas City Southern rail and by truck to Mexico City and to the states of Guerrero, Michoacan, Jalisco, Guanajuato and Queretaro. The Lazareo Cardenas study will show whether it is viable to bring more fuel through that port, rather than importing it through ports on the Mexican Gulf or by rail. He thinks Lazaro Cardenas could have an edge due to its proximity to Mexico’s central and western-central regions, important fuel consumption areas, he said.

Lazaro Cardenas is the closest Pacific port to the central and region of Mexico. Its distance to Mexico City via rail is 600 km compared with 960 km from the Pacific port of Manzanillo. Yet it is farther from Mexico City than the Gulf Coast ports of Tuxpan, 350 km away, Veracruz, 400 km.

Lazaro Cardenas is the deepest port in Mexico, with a depth of 17 meters for inner channels.

“This allows to move more product with only one trip, which makes it very attractive for investors,” Ramirez said.

The port could be an appealing option for refiners in the US West Coast and Asia to enter these markets, he added.

US refiner Tesoro, which has a contract to sell oil products in Mexico, has a strong West Coast presence, with refineries in Los Angeles and Martinez, California, and in Anacortes, Washington.

The port is also within the Special Economic Zone of Lazaro Cardenas, which provides tax and regulatory advantages for new investments.

Separately, Gen Manejos Integrales is repurposing its boat decommissioning terminal at Lazaro Cardenas as a fuel storage and distribution terminal. In 2016, Gen said the project would cost Peso 345 million ($20 million). However, the port and the company are reviewing the final investment plan, Ramirez said. Final details on capacity and investment would be released in August, with the terminal entering operations in the first quarter of 2018, he said.

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