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New pipeline project from Texas to Mexico could bring cheaper gas prices

Mexico City, Mexico — Four new pipelines will be built from the southern US to Mexico where refineries will be able to ship less expensive gasoline into the country, according to the Energy Regulatory Commission (CRE).

Four pipelines are being built that will be used by private companies to enter the country with cheap gasoline, which would arrive from refineries in the southeastern United States.

They will start operating in the first half of this year and aim to bring the main points of entry of fuels to areas such as Monterrey, Mexico City and El Bajío.

The estimated investment for these projects amounts to $2.3 billion USD based on information from the Energy Regulatory Commission (CRE). The new lines will lower the cost of transport up to six times compared to ExxonMobil, which until now, has been the main private competitor of Pemex which brings gas from its refineries in Texas via train to its storage terminals in Guanajuato and San Luis Potosí.

The first to enter into operation will be the Frontera-Norte Poliducto, which will connect the Corpus Christi, Texas refining system with Nuevo Laredo, Tamaulipas, and subsequently lower gasoline and diesel to Monterrey.

It will have a length of 460 kilometers and will be accompanied by four storage terminals.

The project is charged by consortium Dos Águilas and Howard Energy Partners, who required an investment of $500 million USD.

The other three projects are destined to transport gasoline from the port of Tuxpan, Veracruz to the central and lowlands of the country, with companies behind the project including TransCanada and the Mexican companies Sierra Oil & Gas, Invex and Monterra Energy, among others.

The CRE noted that the average cost of transporting gasoline in our country is 13.6 percent of the total, a figure that could go down with the pipelines.

Arturo Carranza, energy analyst at the National Institute of Public Administration (INAP), explained that in order to have an impact on the price of fuels, the pipelines would have to be complemented with storage terminals.

“That would allow a private drop of gasoline from the US and there would be competition with Pemex, and that competition would result in lower prices.”

But the reduction in the price would not be so great, “we would not have prices of 13 pesos per liter, for example,” he said, because other components are also considered in the price of gasoline.

For Ramses Pech, Caravia and Asociados, the impact on prices will depend on what these firms determine they want to achieve in their business plans, “the price of steel is rising so I do not see viable impact on the price.”

According to the prospective of petroleum for 2031 by the Secretariat of Energy (Sener), last year 65 percent of the gasoline consumed in the country was imported, a figure that would drop to 54 percent this year due to the start of operations of some stages of the reconfigurations in the six refineries of the country.

In this sense, in the first eleven months of 2017, the lowest level of production was reported in the six refineries of the country with a daily average of 937,000 barrels per day, reported Pemex.