Railroads move historical volume of gasoline in Mexico

Paradoxically, at a time when railroads could become another of the solutions to mobilize fuels in Mexico, in line with the upward trend in the transport of hydrocarbons that this sector has shown, the blockades to railroads made by the CNTE in Michoacán, threaten to aggravate the shortage of energy in the country.

It is the second cheapest option to move the fuel in Mexico. In 2018, 60.2 million barrels were transported, 25% more than a year earlier. Image: stock photo
It is the second cheapest option to move the fuel in Mexico. In 2018, 60.2 million barrels were transported, 25% more than a year earlier. Image: stock photo

Lourdes Aranda, director of Institutional Relations of Ferromex, warned in an interview with Víctor Piz in El Financiero Bloomberg, that the obstruction of the railroads, which last Friday was 11 days, slows the importation of fuels from other countries, mainly from the United States.

The railways became a relevant and accelerated growth way to bring fuel to the country, so they already represent the second most economical land transport, after the pipelines.

Just last year, in Mexico, 60.2 million barrels of gasoline moved by train, which meant an increase of 25 percent compared to 2017 and the highest volume in the history of the country, according to information from the CRE.

The Commission explained that 8.7 percent of the fuel that was moved in 2018 was by rail tank, which is 1.7 times more efficient than the tank trucks, also known as pipes.

"It is worth mentioning that to transport 6.6 million liters of gasoline, 100 car-rail tanks are required, while in auto-tanks (pipes) 166 units are needed," the CRE responded in an email to El Financiero.

Currently only 6 companies have permits to move fuels in Mexico: Kansas City Southern, Ferromex, Ferrosur, Coahuila Durango Line, Isthmus of Tehuantepec Railroad and Baja California Railroad, which together invested nearly $ 1.5 billion to enter the business.

Aranda said that since the Energy Reform, trains have gained relevance in the transportation of fuels for private companies due to the need to bring them also from other countries.

There is interest in building storage terminals near existing railroads. Currently, Mexico has 6 terminals in operation and 16 in development that can receive hydrocarbons through the tank cars of the railways.

"Businesses related to the Energy Reform in Mexico contributed almost 100 million dollars in revenues (in 2018) to Kansas City Southern and also to a greater volume of products transported," said Patrick Ottensmeyer, CEO of the US firm.

This year, he revealed, the company will invest between 640 and 660 million dollars, of which 45 percent will be dedicated to the growth of key businesses, such as the movement of gasoline by railways.

Luis Farias, CEO of Avant Energy, said that this year a storage terminal will be operating in Queretaro to unload direct from tank cars to pipes and from pipes to gas stations.

"It will be in two stages, the first will be to start operating the system in Queretaro, moving trains from the Texas refineries to Querétaro, and thus downloading pipes directly. It is something that is part of an investment plan of 90 million dollars, "he said.

The CRE recognized that the possible business opportunities for companies are in the Pacific and the Yucatan Peninsula, where they can develop the coexistence of rail lines and storage terminals.