Mexico's Pemex imports first diesel cargo via train from U.S.

Mexico's state oil company Pemex began receiving imported fuel by train at a new privately run terminal for the first time in January as companies expand storage and transportation operations under the country's energy opening, a senior executive said in an interview.

The cargo of just under 60,000 barrels arrived from Port Arthur, Texas, on Jan. 7 at the new private San Jose Iturbide storage terminal in central Guanajuato state via train, marking another first for the company which normally uses pipelines and seaports for fuel imports.

Isaac Volin, head of Pemex's trading arm PMI Comercial Internacional, said the initial cargo was used to test the new process, but he expects similar diesel cargos to supply the terminal via rail about every eight days.

"It's going to allow us to diversify the sources of fuel supply for the country," said Volin.

In the past, PMI has used Pemex storage facilities only to receive imported fuels and Volin described the development as a "strong signal" to private investors that Mexico needs more gasoline and diesel storage infrastructure.

The new stream of imported fuel will help Pemex supply the Mexican capital and several central Mexican states, some of which were hit by sporadic shortages in recent weeks.

The shortages followed a double-digit gasoline price spike that took effect on Jan. 1 across Mexico, where government-set prices are gradually being relaxed and opened to market forces.

The price spike has been met by protests as well as highway blockades and looting of gas stations.

Volin said gasoline imports via rail should get started in "a few weeks" with planned cargos of 75,000 barrels arriving about once a week at the San Jose Iturbide terminal, which is located about 160 miles (260 km) northwest of Mexico City.

The terminal is owned by Grupo Simsa, a Mexican conglomerate that transports fuels with its fleet of trucks, and is operated by U.S. company Howard Energy Partners. It features total storage capacity for 65,000 barrels of diesel and 75,000 barrels of gasoline.

Howard Energy also owns and operates a 230,000-barrel storage facility near Port Arthur.

The rail service is being provided by the Mexican unit of Kansas City Southern, one of the country's top railroad operators.

Volin said future supplies will also be transported via rail to the San Jose Iturbide terminal from Corpus Christie, Texas.