NuStar Energy L.P and PMI, an affiliate of Pemex, announced today that the companies have signed a letter of intent for a proposed joint venture in which the two companies will develop new pipeline infrastructure to transport liquefied petroleum gases (LPGs) and refined products from the US into northern Mexico to meet the region鈥檚 growing demand for these products.
鈥淭his landmark alliance is one of the very first commercial agreements between energy companies from the US and Mexico to create a JV focused on infrastructure, and it resulted from Mexico鈥檚 recently enacted energy reforms, which call for major investments in energy infrastructure and attracting foreign investment in Mexico鈥檚 energy sector,鈥� said PMI Director General Jose Manuel Carrera.聽
鈥淚t would also be the first alliance of its kind for both of our companies. While NuStar and PMI previously partnered to transport propane into Mexico, this would be the first JV between the companies, and it would give PMI access to multiple LPG and refined product suppliers in major refining centres in the US Gulf Coast. Because the agreement primarily involves pipeline transportation of the products into Mexico, it would result in more efficient, clean, and reliable transportation of refined products and LPGs between the U.S. and Mexico by reducing the amount of petroleum products transported by truck across the border.鈥�
Under the proposed JV, the companies will jointly fund construction of new pipeline and storage assets, and NuStar would manage construction and operation of those assets. LPGs and refined products will be delivered from Mont Belvieu and Corpus Christi, Texas, to Nuevo Laredo and Burgos-Reynosa, Mexico.
The new pipeline and terminal facilities will be integrated with NuStar鈥檚 existing pipeline infrastructure. This project will be supported by a throughput commitment from PMI.
鈥淭his is an ideal partnership that would bring together PMI鈥檚 vast presence in Mexico鈥檚 oil and gas market and NuStar鈥檚 logistics expertise and resources to provide a stable supply of LPGs and refined products to meet the significant demand in Mexico,鈥� said NuStar President and Chief Executive Officer Brad Barron. 鈥淭his is an outstanding growth opportunity for NuStar, and our preliminary estimates indicate that this JV opportunity should be immediately accretive to the earnings of both companies once the project goes into service.鈥�
Based on current projections, the projects are expected to be completed and placed into service in the second half of 2016.
Adapted from press release by