KCS promotes rail opportunities under Mexican energy reform

November 13, 2015

Last week in Veracruz, KCS participated in the first Pemex Midstream conference.  The event was organized by the Mexican state-owned petroleum company, Pemex, to explore logistics and distribution opportunities under Mexico’s energy reform.  More than 2,000 representatives of railroads, pipeline and midstream sector companies, transload terminals, brokers and regulatory agencies were in attendance. 

Representing KCS at the event were KCSMS vicepresidente de ventas y mercadotecnia David Eaton, gerente de desarrollo de nuevos negocios Linda Hernandez and coordinación de ventas Yolanda Treviño.  Eaton delivered a presentation to the forum called “Railroads and the Energy Revolution: Opportunities for Mexico”.  Key opportunities for KCS highlighted included:

• Importation and intra-Mexico movement of steel pipe for oil fields and natural gas transmission.  New natural gas pipelines are now under construction.

• Importation of Liquefied Petroleum Gas (LPG).  There is a deficit of LPG in Central Mexico.  As such, KCS will move product to a new specialized rail terminal in San Luis Potosi.  Construction began in early 2015.

• Increased fuel oil moves.  KCS currently moves fuel from Pemex refineries to export.  Energy reform opened doors for increased private sector participation in terminals and more flexible contract guidelines.

• Importation of refined products (gasoline, diesel and biofuels).  Mexico’s demand is increasing.   Refining capacity is sufficient and strategic facilities and partners are being identified.

• Importation of frac sand.

• Shale oil (crude by rail) shipments from Mexican basins to U.S. refineries.

• Crude swaps between the U.S. and Mexico
 
Eaton added that KCS is prepared for these opportunities with locomotives, crews, track capacity, rolling stock and technology solutions in place to handle the business.
 
“KCS is positioned to play a key role in Mexico's new midstream environment,” said Eaton.  “While Mexico has always had immense oil and natural gas supplies, most supply chain activities were previously conducted by the state.  Since congress passed energy reform in 2013, KCS has been working to identify and develop new business opportunities."