Mexico’s Pemex has too much gasoline and nowhere to store it, potentially racking up significant ship fees as demand wanes because of the fast-spreading coronavirus. A lack of storage capacity in Mexico is forcing the state-owned oil company to leave its fuel purchases in ships off the coast of Mexico, according to three people familiar with the situation and ship-tracking data. Now as much as 3 million barrels of refined products are sitting in tankers off of Mexico’s coast.
Mexico has been late to experience the demand slump that has hit other nations because President Andres Manuel Lopez Obrador initially refused to enact stringent measures in response to the coronavirus pandemic. But now sales have fallen between 40% and 50% at some of Mexico’s biggest privately-owned gas stations in the past two weeks, according to three major fuel importers and retailers in Mexico, who asked to remain anonymous because the information is private.
The squeeze is especially tough for Pemex, whose bonds were cut to junk by Moody’s Corp. on Friday after 15 years of oil production declines and losses that almost doubled last year. Pemex’s debt load is the highest of any oil major. With Pemex’s six refineries operating at less than 30% of their capacity, it imports about 65% of Mexico’s gasoline needs, mostly from the U.S. The country was American refiners’ biggest customer, bringing in about 500,000 barrels a day last year.