By Stefanie Eschenbacher and Shariq Khan
MEXICO CITY, May 21 (Reuters) – Vitol, one of the world’s biggest commodities traders, has held talks with service providers and is seeking permits to operate the Rio Bravo fuel storage terminal it built six years ago in northern Mexico and left idle, according to two sources with direct knowledge of the matter and a document reviewed by Reuters.
The Geneva-based trader’s plan to operate the terminal underlines its intention to re-establish in Mexico after a bribery scandal tarnished its reputation. It coincides with a global scramble for energy supply infrastructure during the Iran war, which has upended supply chains.
If Vitol opens the terminal, it would become one of a handful of foreign companies allowed to run major petroleum infrastructure in Mexico, where state energy company Pemex dominates the industry from production to refining and distribution.
Vitol sought several third-party services in recent months, including testing, certification and documentation of its operations at the terminal, according to a document outlining the next steps of the process and sources.
It needs those contracts with independent service providers before it can apply to the Mexican energy ministry for permits to begin terminal operations.
Vitol declined to comment. The ministry did not respond to a request for comment.
The sources, who requested anonymity due to commercial sensitivity, said Vitol has spoken with Mexican officials about its plan. Reuters was unable to determine how advanced the talks are.
The terminal in Matamoros, Tamaulipas, on the U.S.-Mexico border, has never operated since construction finished in 2020, filings with the regulator showed.
TARIFF ADVANTAGE
The terminal is designed to receive fuel piped from a port facility in Brownsville, Texas, via a 10.5-kilometer (6.5-mile) cross-border pipeline.
The terminal’s pipeline connection allows it to benefit from fixed pipeline tariff rates and avoid the surge in seaborne freight costs due to the Iran war, said one of the sources, who is involved in efforts to open the terminal.
The Rio Bravo terminal, with a storage capacity of 270,000 barrels, consists of 12 tanks to store gasoline and diesel for distribution and sale, a document relating to the terminal showed. Its opening would give Vitol a physical foothold in the Mexican downstream market for the first time.
Vitol was obliged to offer the terminal to Pemex, said the other source, who has worked for years with the trader in Mexico. Pemex did not comment.
Vitol has a troubled history in Mexico. In December 2020, it admitted to bribing officials in Ecuador, Mexico, and Brazil.
Its U.S. subsidiary agreed to pay $164 million as part of a deferred prosecution agreement following a U.S. investigation into corruption in Brazil, Ecuador and Mexico.
In March 2021, Pemex’s trading arm PMI said it had suspended its commercial relationship with Vitol after the trader admitted paying bribes to retain business in Mexico.
(Reporting by Stefanie Eschenbacher in Mexico City and Shariq Khan in New York; additional reporting by Adriana Barrera in Mexico City; editing by Rod Nickel)
Comments