Mexico to delay clean diesel rule as fuel is scarce
MEXICO CITY (Reuters) - Mexico’s government, dealing with fuel shortages stemming from a crackdown on theft, is expected to postpone a new rule requiring pumping stations to sell cleaner diesel, according to sources with knowledge of the decision and documents from the regulator.
This marks the first delay of a 2016 regulation that had been expected to go into effect at the end of 2018.
It has lost traction mainly due to lack of infrastructure, but also because of fears that it would exacerbate fuel shortages that emerged following President Andres Manuel Lopez Obrador’s orders to shut key fuel pipelines to combat rampant theft, according to two of the sources.
Lopez Obrador’s crackdown has led to long lines at stations as deliveries are largely being made by truck rather than through pipelines. Fuel theft is endemic in Mexico, but businesses and consumers are growing concerned that the move is starting to harm the economy.
Mexico’s new rule will require ultra-low sulfur diesel, or ULSD, to be sold in the coming months. But at least two of state-run Pemex’s refineries have not been updated to produce diesel with less sulfur content, so the country is expected to rely almost completely on imports from the United States.
Mexico last year used 390,000 barrels per day (
Mexico’s Energy Regulation Commission (CRE) on Dec. 28 suspended implementation of the ULSD rule to allow six more months to ensure an adequate supply of ULSD in portions of nine states in the country’s western and central regions, where diesel consumption is heavy
But the rule has not yet been made official, creating doubts on the date it will take effect. A source at the regulator said plans call for it to be published in the coming days.
The CRE document
Mexico currently allows up to 500 parts per million of sulfur in motor diesel. The new rule would cut that to 15 parts per million, similar to standards in the United States, which reduces overall carbon emissions.
Shippers worldwide are gearing up for similar changes to begin in 2020 that would limit the kind of fuel tankers can operate on to low-sulfur fuels.
Mexico’s refineries have suffered from underinvestment and poor maintenance in recent years. Pemex’s diesel production has dropped to 118,000
Traders that were preparing for growing ULSD imports from the United States, the continent’s largest producer of distillates, are now waiting for the document to be released to better plan purchase volumes, two sources said.
No ULSD imports entered through Mexico’s major oil ports in early January, according to
“Pemex does not have
Reporting by Adriana Barrera and Marianna Parraga; Editing by David
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