Bloomberg — More than 60 ships carrying an estimated 18 million barrels of fuel are sitting off the coast of Mexico waiting for storage to open up so they can unload -- and paying hefty fees for every day they’re forced to wait.
The majority of those vessels are carrying gasoline and diesel imported by state-owned Petroleos Mexicanos, people familiar with the situation said. With daily penalties of about $40,000 per ship charged for every day of waiting, fuel importers stuck in line are paying about $2.4 million a day in total, with Pemex bearing the bulk of it, people said.
In fact, as imports grow, the ship backlog has climbed to more than three times the normal volume, one of the people said. The 60 or so ships sitting in wait hold enough fuel to meet about 60% of the country’s monthly demand. The last time the logjam was so bad was in early 2020, when the Covid-19 pandemic forced Mexico to declare force majeure on cargoes as demand for fuels plummeted, the people said.
Pemex didn’t immediately reply to a request for comment.
The congestion at sea is the result of several compounding factors in addition to a lack of available storage. The Mexican government announced earlier this year fuel subsidies designed to keep a lid on inflation, which importers like Pemex’s trading unit, PMI, are using to offset the cost of overseas fuel purchases. At the same time, Pemex ramped up its gasoline and diesel purchases to meet an expected rise in demand as the pandemic progresses and to stock up on supplies before the worst of hurricane season.
Meanwhile, Mexico’s refineries are operating at less than half of capacity amid maintenance, resulting in a need to boost imports. Pemex imported about 888,000 barrels of refined products in June, a record this year, with gasoline purchases rising 17% compared to May, and diesel increasing by 34%.
“It makes sense for them to err on the side of caution to secure supplies because if a hurricane strikes the Gulf of Mexico, they could be in real trouble,” said Felipe Perez, a downstream director at S&P Global Inc. in Los Angeles. “Domestic gasoline inventories in Mexico are a bit tight.”
Gasoline inventories are sufficient to meet nine to 10 days of demand, Perez said. In comparison, the US holds enough stocks to face 25.8 days of demand, according to the Energy Information Administration.