Refiners in the U.S. Gulf Coast have been cashing in on increased demands for fuel by Mexico, shipping volumes in record number to its neighbor to the south that has not expanded its refining network and therefore cannot supply an economy in expansion.
The trade of fuel could surpass the million barrels a day level at times during 2017 due to Mexico’s growing dependence on the U.S. for strategic supplies of energy and providing huge business for refiners of over $15 billion annually.
The increase in fuel imports by Mexico reflects on its economy that, has grown for 27 consecutive quarters amidst a public austerity program, but has not been able to increase its output in refining to satisfy the constant growth of its demand for energy.
It led to a rapid reversal in the trade of energy between the two nations. During 2016, Mexico as a crude exporter will turn into a net oil importer from the U.S. for just the first time.
Shipments of refined fuel that are heading south of the border outnumber those of crude entering into the U.S.
Only 10 years ago, U.S. net imports of oil from Mexico were 1.45 million barrels a day.
Profit margins on exports are high for the U.S. refiners, said one source from one of the refiners.
Mexico is a bright spot for what has been a dark year otherwise in the refining industry of the U.S. with profits dropping to a low of five years in 2016.
One analyst in the oil industry said that the appetite Mexico has for U.S. distillates and gasoline has been a significant part in helping to sustain the U.S. refining margins.
Exports are also helping ease a glut of supply in the market across the U.S., said one analyst. That boosts the profit margins across the industry, even for those refiners that are not involved directly in this trade, the analyst added.
Other than Pemex, which is run by the government, amongst the top exporters of gasoline and distillates in the U.S. to Mexico in 2016 are Exxon Mobil, Citgo and Marathon.
The data shows that Citgo, which is owned by PDVSA the state oil company of Venezuela, has exported close to 57,000 barrels per day into Mexico, while Marathon is shipping nearly 43,000 barrels daily.
Last year the top exporter was Valero Energy with a daily barrel rate of almost 62,000.