NuStar, Pemex plan pipeline project to Northern Mexico

San Antonio-based NuStar Energy LP and Petróleos Mexicanos plan to develop pipelines that will transport liquefied petroleum gases and refined fuels from the United States into northern Mexico, the companies said Wednesday.

The project is expected to be placed into service in the second half of 2016.

The deal, a joint venture between locally based NuStar and Pemex affiliate PMI “is one of the very first commercial agreements between energy companies from the U.S. and Mexico to create a (joint venture) focused on infrastructure,” and is a result of Mexico’s recently enacted energy reforms, PMI director general Jose Manuel Carrera said in a statement.

Mexico’s reforms call for major investments in energy infrastructure and encouraging foreign investment in Mexico’s energy sector, Carrera added.

The deal also is the first of its kind for both companies, their officials said in a statement.

NuStar CEO Brad Barron called the planned venture “an ideal partnership” that will bring a stable supply of products to meet significant demand in Mexico.

He added that the joint venture “is an outstanding growth opportunity for NuStar,” and should immediately boost the earnings of both companies once the project goes into service.

The pipeline and related infrastructure will meet northern Mexico’s growing demand for liquefied petroleum gases (LPG) and fuels, Carrera said.

NuStar and PMI will jointly pay for construction of new pipeline and storage assets, and NuStar would manage construction and operation of the system.

LPGs and refined products will be delivered from Mont Belvieu and Corpus Christi to Nuevo Laredo and Burgos-Reynosa, Mexico, the companies said.