Valero Signs Long-Term Agreements
to Import Refined Products Into Central Mexico
SAN ANTONIO, Aug. 03, 2017 (GLOBE NEWSWIRE) — Valero Marketing and Supply de México, S.A. de C.V., an indirect wholly-owned subsidiary of Valero Energy Corporation (NYSE:VLO) (“Valero”), announced today that it has signed long-term agreements with Infraestructura Energetica Nova, S.A.B. de C.V. (BMV:IENOVA) (“IEnova”), to import refined products at the new Port of Veracruz.
In July, IEnova won the Port of Veracruz’s bid for a 20-year concession to build and operate a new marine terminal for the receipt, storage, and delivery of refined products. IEnova executed the concession agreement today with the Port Authority of Veracruz to develop, construct, and operate the terminal.
The new terminal to be built by IEnova will have approximately 1.4 million barrels of storage capacity. IEnova will also build and operate two additional storage terminals, strategically located near Puebla and Mexico City, which will have initial storage capacities of approximately 500,000 and 800,000 barrels, respectively.
Valero has contracted with IEnova to use all three terminals, to supply gasoline, diesel, and jet fuel to customers. The marine terminal in Veracruz will start operations as early as the end of 2018, with the two inland terminals serving customers in early 2019. Valero will also have an option to acquire a 50 percent interest in each of the terminals.
“We are pleased to enter this relationship with IEnova, a well-respected energy infrastructure company,” said Joe Gorder, Valero Chairman, President and Chief Executive Officer. “With the recent Constitutional reform, it is now possible for Valero to import refined products directly into Mexico for further distribution, including branded sales. This transaction will enable us to extend our supply chain to efficiently supply gasoline, diesel and jet fuel to the growing Mexican market. As we continue to evaluate ways to further engage in Mexico, we look forward to discussing opportunities with Pemex that advance our respective strategic objectives, as well as discussing supply arrangements with independent retail operators.”
Carlos Ruiz Sacristán, CEO and Chairman of the Board of IEnova, stated that “with this transaction, we demonstrate IEnova’s ability to continue adding new business segments to our portfolio while maintaining our solid business strategy. Mexico will require important investments in the transportation and storage of refined products in the next years, and IEnova is ideally positioned to become a leader.”
In addition, Valero separately executed a long-term agreement with rail company Ferromex S.A. de C.V., which is majority-owned by Grupo México S.A.B. de C.V. (BMV:GMEXICOB), to transport refined products from Veracruz to the inland terminals via unit trains.
“This agreement reflects a clear opportunity to create new fuels transportation alternatives and improve logistic efficiencies in Mexico,” said Fernando Lopez, Ferromex Chief Marketing Officer. “Ferromex has more than 10 years of experience moving fuels through our network. We are excited to provide the significant security and flexibility of our rail services to a new customer like Valero in a growing Mexican fuels market.”
This transaction enhances Valero’s existing infrastructure for supplying northern Mexico and improves the efficiency of fuel delivery into this area. The company expects to begin delivering products through this expanded facility by year-end.
“This agreement is another step in our strategy to extend Valero’s supply chain,” said Gary Simmons, Senior Vice President Marketing & Supply. “This transaction combined with our agreements to supply central Mexico demonstrates our commitment to efficiently supply gasoline and diesel to the growing Mexican markets and will further strengthen our distribution presence, including branded sales.”
In August 2017, Valero announced a long-term agreement with IEnova to import refined products at the new Port of Veracruz and distribute into central Mexico. IEnova won the Port of Veracruz’s bid for a 20-year concession to build and operate a new terminal with 1.4 million barrels of storage capacity, which has since expanded to 2.1 million barrels. In addition, IEnova is building two inland storage terminals strategically located near Puebla and Mexico City that will be supplied by rail. Valero has exclusive use of all three terminals. IEnova expects the Veracruz terminal to start operations by the end of second-quarter 2019, with the inland terminals coming online in third-quarter 2019.
Valero Energy Corporation, through its subsidiaries, is an international manufacturer and marketer of transportation fuels and other petrochemical products. Valero, a Fortune 50 company based in San Antonio, Texas, with approximately 10,000 employees, is an independent petroleum refiner and ethanol producer, and its assets include 15 petroleum refineries with a combined throughput capacity of approximately 3.1 million barrels per day and 11 ethanol plants with a combined production capacity of 1.45 billion gallons per year.
The petroleum refineries are located in the United States (“U.S.”), Canada, and the United Kingdom (“U.K.”), and the ethanol plants are located in the Mid-Continent region of the U.S. In addition, Valero owns the 2 percent general partner interest and a majority limited partner interest in Valero Energy Partners LP (“VLP”), a midstream master limited partnership. Valero sells its products in both the wholesale rack and bulk markets, and approximately 7,400 outlets carry Valero’s brand names in the U.S., Canada, the U.K., and Ireland. Please visit www.valero.com for more information.
IEnova, a Sempra Energy company, develops, constructs, and operates energy infrastructure in Mexico. With nearly 900 employees and more than $7 billion U.S. dollars invested in the country, its presence spans various lines of business within the Mexican energy value chain. IEnova is the first and only energy infrastructure company to be listed on the Mexican stock exchange, and it is the only energy company to be part of the IPC Sustainability Index.
About Grupo México and Ferromex
GMXT, through its subsidiary Ferromex, is the largest rail transportation company in Mexico, with more than 6,200 miles (10,000 km) of rail track covering all major industrial and commercial zones in the country, connecting to international transportation networks through eight seaports and six border crossings, and handling just over 1.4 million carloads per year. GMXT’s rail lines cover 24 states in Mexico, and the states of Texas and Florida in the U.S.
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