May 26, 2017 [OPIS] - Mexico's Federal Electricity Commission (CFE) is entering the country's fuel logistics landscape with an offer of storage for gasoline and diesel at fuel tank sites that are gradually emptying as the country moves to natural gas for electricity generation.
Up for grabs over 14 years is more than 10 million bbl of storage capacity at 56 sites all over the country.
Announced earlier this year, the government entity has created a subsidiary — CFEnergia S.A. — to optimize the fuel storage of CFE assets. CFEnergia has said it plans this year to select one or more partners to convert tanks holding heavy fuel oil and diesel for power stations to storage of gasoline and diesel by third parties.
The terms of the selection process have been pending since March 24 and industry sources in Mexico note that there’s no date currently targeted for release of the official request for proposals (RFP).
“CFE seeks to participate in the oil value chain profitably, through partnerships in which CFE will provide the use of its infrastructure … and the area it occupies,” the agency said in a fact sheet about the process. “Partners will provide funding for facilities, obtaining permissions, engineering, procurement and construction, as well as the operation and maintenance of facilities.”
The fact sheet notes that CFEnergia is conducting studies to “reconfigure this storage capacity in a prudent manner and according to the needs of the market.”
The first phase of the CFEnergia bidding process is to be held for storage assets in Baja California and Sonora. The two Northwest states were the first to see retail fuel prices liberated in March of this year and a portion of capacity at Pemex terminals and pipelines there was the first to be awarded to a non-Pemex petroleum company (Tesoro Corp.) in Pemex Logistica’s initial open season.
According to a CFEnergia presentation available on its website, the Northwest partnership program is to include access to a data room and site visits, followed by delivery of offers, evaluation and awards over the course of about two months.
CFE assets in Baja California allow for storage of up to 574,000 bbl in Ensenada, Tijuana and Mexicali, although about half appears to be available now and the rest not until 2020.
Similarly, in Sonora some 442,000 bbl of a total 1.02 million bbl of storage is available now and the rest not before 2019.
The presentation shows that there are almost twice as many CFE storage sites in the northern half of the country (37) as in the southern half (19), but the South’s capacity is 100,000 bbl higher at 5.4 million bbl.
Among the sites in the North, 25 are diesel storage with capacity ranging from 5,000 bbl to 98,000 bbl, and 12 are heavy fuel oil with capacity ranging from 143,000 bbl to 657,000 bbl.
Of the 19 sites in the South, 10 have held diesel and nine have been used for fuel oil. The largest fuel oil storage site can hold 1.889 million bbl and the smallest 89,000 bbl, with the rest ranging between 205,000 and 807,000 bbl.
The two largest diesel storage locations have capacities of 207,000 bbl and 108,000 bbl, with the rest ranging between 14,000 bbl and 71,000 bbl.
Further detail about the sites is not readily available and said not likely to be made public until the RFP is released. Those unknowns include the age and current condition of the tanks, the disposition of the intake/outflow equipment and whether they’re above-ground or underground.
CFE locations have multiple choices of supply, according to CFEnergia.
The company touts the strategic opportunity of the midstream offering, noting that in some of the locations there is no other storage infrastructure, and in others the existing storage is insufficient. Both situations “provide solid foundations for future expansion,” CFEnergia says.
The presentation’s pitch also references Mexico’s plan to raise mandatory minimum fuel storage levels over the next few years in order to increase energy security in the country.
Current oil products storage capacity in Mexico can supply only about two to three days of demand. Under the new plan, all fuel marketers and distributors will be obligated to hold minimum volumes equivalent to five days of average sales by 2019, 10 days’ worth by 2121 and 15 days’ worth by 2025.
Those inventories are to be located no further than 250 km (about 155 miles) or six hours’ travel time from marketers’ and distributors’ target markets.
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