Andeavor Deal Paves Way for Another Round of Expansion in Mexico
07.27.2018 - NEWS

July 27, 2018 [San Antonio Business Journal] -  San Antonio-based refining company Andeavor has been awarded pipeline and storage terminal capacity that will facilitate a new round of expansion of its ARCO brand of gas stations in Mexico.


Pemex Logistica, the logistics arm of Mexico’s national oil company Petróleos Mexicanos, awarded Andeavor capacity along pipelines and storage terminals in three states. Andeavor has been granted capacity at marine and storage terminals in the coastal states of Baja California Sur and Sinaloa. Andeavor has also been granted capacity along two pipelines and two storage terminals in Chihuahua.

Details of Andeavor’s winning bid are confidential. The company is working toward definitive agreements with Pemex Logistica. Nonetheless, the award comes at time when Andeavor has plans to expands its presence in Mexico, whose six aging refineries do not make enough gasoline and diesel to meet growing demand.

“We are excited about this awarded capacity and the opportunity it provides for additional value creation for our company, customers, business partners and communities in Mexico,” Andeavor Country Director for Mexico Siomara Marquez said in a statement.

Andeavor was among the first U.S. refining companies to act on Mexico’s energy reforms, which opened its energy markets to foreign investment and competition. The company signed a pipeline and storage terminal deal with Petroleos Mexicanos in July 2017.

In a partnership with Tijuana-based Profuels, Andeavor has since opened more than five dozen ACRO-branded gas stations in Baja California and Sonora. The company has plans to have more than 300 ARCO locations in Mexico by 2020.

The Pemex Logistica award and a cross-border refined products pipeline owned by Magellan Midstream Partners LP will enable Andeavor to use its El Paso Refinery to supply ARCO gas stations in Chihuahua and Sinaloa. Capable of processing up to 135,000 barrels of crude oil per day, the refinery is able to receive crude oil feedstocks from the nearby Permian Basin via pipeline.

Andeavor Marketing Director for Mexico Leonardo Giron told S&P Global Platts that the company exports 15,000 to 20,000 barrels of gasoline and diesel per day to Mexico. The Pemex Logistica award, he said, will boost exports and facilitate greater integration with the company’s U.S. assets with respect to its plans in Mexico.

The new award from Pemex Logistica also comes as Ohio-based refining company Marathon Petroleum Corp. is working to close a $23.3 billion acquisition of Andeavor, which is expected to occur by the third quarter.

“Right now, our strategic vision for Mexico is to seek opportunities to import our own fuel at an economical price from our U.S. refineries,” Giron told Platts. “However, this could change once the fusion with Marathon is approved.” 

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