A dormant cross-border fuel terminal could give the trader direct downstream access in Mexico. Negotiations and permit hurdles still leave timing unclear.
In Mexico, on May 21 – Vitol, one of the world’s leading commodity traders, was negotiating with service providers and seeking permits to operate the Rio Bravo fuel storage terminal, which was built six years ago in the northern part of the country and has remained idle, according to two people with direct knowledge of the matter and a document being reviewed by the parties.
The plan to resume operations at the terminal underscores the company’s intention to return to the Mexican market after a bribery scandal that dealt a reputational blow. This comes amid a global realignment of energy infrastructure in response to the war against Iran, which disrupted supply chains.
If Vitol opens the terminal, it would become one of the few foreign players permitted to operate a major oil infrastructure in Mexico, where Pemex dominates – from extraction to refining, distribution, and sales.
Vitol has engaged third-party service providers of various kinds – testing, certification, and documentation of terminal operations, as evidenced by a document outlining the next steps of the process.
These contracts with independent service providers must be confirmed before submitting a request to the Mexican Ministry of Energy for permission to commence operations at the terminal.
The company declined to comment, and the ministry did not respond to a request for comment.
Sources who asked to remain anonymous due to commercial sensitivity said that Vitol has been in talks with Mexican officials about its plan. The investigation cannot determine how far these discussions have progressed.
The terminal in Matamoros, Tamaulipas state, on the US-Mexico border, has never operated since construction was completed in 2020, according to regulator data.
ADVANTAGES OF THE TARIFFS
The terminal is designed to receive fuel arriving via a pipeline from a port facility in Brownsville, Texas, through a border-crossing pipeline about 10.5 kilometers long.
The connection to the pipeline allows the use of fixed tariff rates on the pipeline and helps avoid higher costs of sea transport due to the war with Iran, said one of the sources involved in the terminal’s opening.
Rio Bravo has storage capacity of about 270,000 barrels and consists of 12 tanks for storing gasoline and diesel for distribution and sale; its opening would give Vitol a physical presence in Mexico’s downstream market for the first time.
Vitol had approached Pemex with the terminal, but Pemex did not respond to requests for comment.
Vitol’s relations with Mexico are not straightforward: in December 2020 the company admitted paying bribes to officials in Ecuador, Mexico, and Brazil. The American affiliate of the company agreed to pay $164 million under a deferred prosecution agreement following a bribery investigation in Brazil, Ecuador, and Mexico. In March 2021, Pemex’s trading subsidiary PMI said it had suspended its commercial relations with Vitol following these admissions.
Negotiations are ongoing, but the exact status of the process and the dates for a decision remain unknown.