Kansas City Southern heads joint venture to relieve Mexican fuel demand
Kansas City Southern (KCS), Watco Companies, LLC (Watco) and WTC Industrial (WTC), announced a joint venture investment aimed to facilitate and expand the exportation of liquid fuels from the United States to Mexico.
The project will include the construction of a unit train liquid fuels terminal located in the WTC Industrial Park in San Luis Potosi. The facility will be solely rail served by Kansas City Southern de Mexico (KCSM).
The joint venture comes as a direct result of energy reform legislation passed in Mexico in 2013. Recognizing that it lacked the refinery infrastructure necessary to meet its growing demand for refined energy products, Mexico developed legislation which put into motion a process which will culminate by 2018 in the country’s energy markets being fully open to foreign investment and the importation of refined energy products, including gasoline and diesel.
“Kansas City Southern is pleased to be part of this joint venture, which will expand the export of U.S. petroleum products to Mexico,” said KCS president and chief executive officer Patrick J. Ottensmeyer in a press release.
“Not only will the terminal provide Mexico with vitally needed refined energy products, it will also serve to boost job creation in both the U.S. and Mexico. This project perfectly aligns the goals of Mexican energy reform with the desire of U.S. refining companies to expand their operations and enter new markets,” Ottensmeyer added.
The joint venture partners will invest approximately US$ 45 million in this phase of the project, which has an anticipated completion in the second quarter of 2017.
It is projected that the terminal project will eventually include a storage facility that would provide retail fuels for the population of Central Mexico.
“KCS looks forward to serving this major fluids distribution terminal in San Luis Potosi,” said Mr. Ottensmeyer. “It provides us with excellent cross-border line haul opportunities as well as moving product within Mexico on KCSM. We have a successful history of working with Watco and WTC, and we are excited about the chance to leverage each of our strengths to create the efficiencies and economies of scale that will benefit both the U.S. and Mexico.”
“The opportunity to partner with WTC and KCS in San Luis Potosi is a best-case scenario,” said Watco senior vice president network strategy Allan Roach.
WTC Industrial has an existing, modern, state-of-the-art industrial park and construction of the new rail terminal at the park is well under way and on schedule.
The location adjacent to the KCSM main line ensures easy access to the terminal and quick cycle times of customer rail cars. The terminal is located in a Free Trade Zone, which provides an added economical advantage to rail shippers. The terminal will have 24 hour/7 days a week secured, fully automated operations for unit trains and manifest shipments.