Magazine article SourceMex Economic News & Analysis on Mexico

Industry Expects Adequate Domestic Supplies of Heating Oil despite Potential for Global Shortages

Magazine article SourceMex Economic News & Analysis on Mexico

Industry Expects Adequate Domestic Supplies of Heating Oil despite Potential for Global Shortages

Article excerpt

Supplies of liquefied petroleum gas (LPG) should be sufficient to meet the needs of residential and commercial users this year despite the possibility of international shortages of the fuel because of the war in Iraq.

LPG is still used for heating and cooking in 82% of the estimated 20 million Mexican households even though the country has made small strides in converting usage to natural gas, according to statistics from the Asociacion Mexicana de Distribuidores de Gas Licuado y Empresas Conexas (ASOCIMEX) and the Asociacion Nacional de Distribuidores de Gas LP (ASOCIGAS). This level of usage compares with 85% in 2001.

Industry sources said the state-run oil company PEMEX has maintained sufficiently high production of LPG to compensate for any possible decline in imports, even though purchases from overseas suppliers have remained steady since the war in Iraq started several weeks ago.

Mexico relies on imports from Algeria, South Africa, the US, and Venezuela for one-third of the 330,000 barrels of LPG sold in the country daily.

PEMEX expects to reduce reliance on imports by the end of the year, when a new processing facility in Tamaulipas state is completed. The facility is expected to boost domestic production by 21,000 barrels per day, thus reducing imports by 18% relative to 2002, said Salvador Garcia, deputy director of PEMEX subsidiary Pemex Gas y Petroquimica Basica.

Private distributors are also expected to invest about US$240 million to construct new plants and improve existing facilities, which should also help stabilize domestic inventories of LPG.

Mexico dealt with shortages of LPG in the past with such steps as easing restrictions on private imports of the fuel (see SourceMex, 2000-01-26).

Tight supplies of LPG also led to increased regulation, with the government setting temporary ceilings on the price of LPG sold to residential customers (see SourceMex, 2001-03-14). …

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