NuStar, Mexico’s Pemex to expand transborder naphtha shipments

NuStar Energy and PMI, an affiliate of Petróleos Mexicanos (Pemex), have expanded operations in which NuStar transports and stores naphtha, a gasoline blending component, for PMI. 

Under the terms of the 10-year agreement, which extends a previous 10-year agreement between the two companies that went into effect in 2005, naphtha produced at Pemex’s Reynosa-Burgos Complex in northern Mexico is transported via the NuStar Burgos-Valley pipeline system to NuStar’s terminal in Edinburg, Texas. 

From Edinburg, the naphtha is delivered into Transmontaigne’s terminal in Brownsville, Texas. 

NuStar says it invested in the construction of a new 50,000-bbl naphtha storage tank at the Edinburg Terminal to augment the project’s original 80,000-bbl storage capacity and accommodate the additional grades and volumes of naphtha. 

The services under this revised agreement, which also includes a slight increase in throughput commitment from PMI, commenced on April 1, 2015.

The agreement and related capital investment provides a more efficient, safe and economical method of delivery as it replaces truck deliveries that were moving the naphtha from Mexico to Brownsville, according to project officials.

“PMI has always been an outstanding partner for NuStar, so we are very pleased to expand operations through this latest contract with them because it will benefit both companies,” said Brad Barron, CEO of NuStar. 

“For a modest investment to construct an additional tank and upgrade a few items on the system, NuStar is able to expand our services to PMI and will continue to generate returns for NuStar and PMI for the next 10 years," he added.

Barron noted that work continues on the previously-announced joint venture with PMI to transport propane from the US into Northern Mexico, stating that he hopes to have an update on the JV in the very near future.

PMI officials stated that they are confident in this new project and that they look forward to continuing development of key infrastructure that improves Pemex and Mexico’s energy performance. They also noted that the transaction fosters the integration of the North American energy markets.