i R(-t t 'JRN l - l,X1EIDOBT5 DESI RESTRICTED M WiT INReport No. PTR-68 l VVITHIN ONE WEEK L:.n r.p ws prepared for use - n,L!- *L D- nd i They do not accept responsibility for its accuracy or completeness. The report may n.& WC puUIiliIu our muy ii be quoreo as representing rneir views. - - INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION THE TRANSPORT SECTOR OF (in four volumes) VOLUME III PART A - PORTS PART R - PEM1EXAY. PE'TROLET UTMT TR ANSPORT May 13, 1971 Transportation Projects Department fTlM ryP Af.TCZP T~ qP'.YPt tin MvlYT(' n TTnVTr TTT V %J..DU.LU. "Lo .L- Table of Contents moco (1OT ~ M--- - - j.! -- r,ai 1.LIUJP 3146 - ħYju.i.u ħL1vpuorL-tħuIo Net-~wor-k) PART A - ruRTS rage 0o. I. BACKGRO'wLND II. POLICY, PLANrNIrNG ' ANDADMINISTRATION 4 A. Policy 4 B. Port Organization 5 C. in-vestment Planning 6 II. PORT F'ACILITIES AND OPERATIONS 7 A. General 7 B. Facilities 7 C. Dredging 8 D. -Taintenance 8 E. Cargo Handling 8 IV. TRAFFIC - PAST AND FUTURE 11 A. Past 11 B. Future 13 V. FINANCES 14 A. General 14 B. Federal Revenues and Expenses 15 C. Cargo Handling and other Charges 15 VI. RECONMENDATIONS 18 ANNEX A - Possible Investment/Improvement Program TABLES 1. Parties Principally Interested in Port Matters 2. Port Charges & Product.imtv t.Rtes at Selectef Ports - 1968 3. Seaborne Cargoes in Foreign and Cabotage Trades ) Se-horne Cargoes - Gl f nnd Pacific Ports 5. Port Traffic - Vera Cruz 6 . Port Tr-raffin - Tmnpico (Tnble of Gontent-sq Continued) 7. Port TnvAstments- 196l-19(Sg 8. Port Revenues & Expenses (1968) 9. Port Revenes & Exyenses (1969) 10. Port User Charges (Decree - Law of April 28, 1966) 11. Represen.tative Ghn-ges Awi Uaiol- A r-g Port f' Vera C7z FIGURE 1 Me co, M-i o MT.e PART B - PEMEX: PETROLEUM TRANSPORT Page No. I. SUPPLY FACTORS AFFECTING TlHE PLANNING OF TRANSPORT LI ACILT? Tn,?S 1 A. Introduction i B. Location of Production 2 n n- __ or^ >n C. ntserves of Oil and Gas 3 D. Location of Refineries 4 II. PETROLEUI TRANSPORT FACILITIES AND COSTS 6 A. Pipelines 6 B. Tanker Fleet and Operating Costs 9 C. Rail and Road Facilities and Operating Costs 12 III. TRAFFIC TRENDS AND PROBLEMS 14 A. Domestic Consumption of Refined Products 14 B. Traffic Flows by Mode 15 C. Intermodal Distribution 18 IV, INVESTMENT AND MAJOR PROJECTS 20 A. Past Investment 20 B. Future Investment 21 C. Major Products Pipelines 22 D. Port to Market Pipeline 27 E. Mexico City - Airport Pipeline 28 F. Tankers 28 G. Pacific Coast Distribution of Jet Fuel 29 V. TRANSPORT POLICY AND COORDINATIOII 30 A. Policy Objectives 30 B. Organization and Administration 30 C. Coordination 31 - 3 - (Table of Contents Continued) '7' ADT T f' 4 ~TrI .___~. ..L___a_ 1-... tfA~ I .vuħ -s Vra r isUħU-oeU ryiUu 2. Theoretical Duration of Liquid Hydrocarbons and 3. Products Pipelines in Mexico 4. r-incipal Crude Peuroici-rr Pipei nes 5. Principal Natural Gas Pipelines in Mexico 6. Pipeline Operating Costs 7. Pemex Tanker Fleet as of April 30, 1970 8. Supply and Demand of Crude Petroleum and Refined Products 9. Domestic Consumption of Refined Products 1959, 1964, 1968 10. Mrovement of Refined Products by Pipe-line 11. Transmission of Natural Gas by Pipeline 12. Tanker Transportation in Tons and Ton/km 13. Volumes Transported by Tanker 14. Transport Sector Investments, 1965-69 15. Transport Sector Investment Program (1971-75) CA/IFOA'N/A 9 1 K.,.M X I/A E (? 290biS>2 S ':\ 1'' \ fiI )< l >lI,,ss" At E X( I C 0 0 - ...°$ .... TRANS,PORTAT'ION NE TWORK -r 4tCC 0='o G U I F O F bi E X / O U~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~VU A / t -10 to. <_ \< '%x d.1 C Ls qo /J -tl O . n2@1 \>>4~/ C0'eG A I E M A L A 10 iro~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~0NDI PART A TOR I. BACKGROUND 1.01 Along its 10,000 km of Gulf and Pacific Ocean coastlines Mexicc now has 36 ports of varying size and importance. The country's economic development since the 1910 revolution, however, has not depended significaatJ-. on seaborne international trade. One effect of the revolution was that Mexi,c largely turned its back to the sea, looking inward to the resolution of its political, economic and social problems. Political power rested mainly with those from the dry central plateau and inland northern areas. Major efforts were made by land distribution and irrigation programs in these areas to raase agricultural output and thus feed the country's rapidly growing population. These, together with other projects of "high political visibility", left limited resources for agriculture and industrial development in and around the ports, many of whichl are located in physically and/or climatically diffi- cult coastal plain areas where development costs are higher. 1.02 The bulk of Mexico's econormic activity has become concentrated in the central Plateau area. drawing migrants from elsewhere. The area. whcic includes Mexico City, geographically accounts for only 10% of the country but has over 50% of the total population. It is separated from the sea by mountain barriers that have made new or improved road and/or rail access to many seaports both difficult and eostlv. As a remult; international trale developed strongly along existing rail and/or road routes to the U.S.A. 1.03 The Mexican economy is still not heavily dependent on ocean trade. Imports in recent venr-R for exmpnel have been nrnonnd 6=0 million tons E.a, Two-thirds of these, however, have come across the 3,000 kme land border '3rith the T.S.A. Of the one-+hir arYiving by sea, -hout 75 have entered thrchun the ports on the Gulf coast. This reflects Mexico's traditional trading relationships wT.rh Europte, +hm UTi-Vn d Stases a-r. +he eas~+-rn s n-red countries of South America rather than with Japan and other countries in the Far East_ 100V 't c o -.ra oi- 15 M -l&.on. t-1h+ons or so of expor+s a o 1 million tons went by sea -- divided roughly half and half between the Gulf ar.d Padi-ic coast- ports. LIS .eaDo,rne ex- -s, however, acco-Lunt flor less tha>n w.- * J. port~@~ ~ .kJ..LU, Ii VV...LWU LJ. ħ UJ.W.LI 50% of the total value of all commodity exports because they consist maially of lowTr value. to nieight co A4odities such as sugar, mholasses, slphur, r,nerals (e.g. fluospar, zinc, and lead), cotton, corn and petroleum products (about Ino!0/ nw|| v _-1 N .: T_; _. 1.*_ _ _ ._ _ _- ___ X_-- _4._ ts_A 30of aIVllexportx torJagesJ * rv U I V [ - v aluebucll ib LI-LL U Ila , Utr and vegetables, move by road or rail to the U.S.A.1/ 1.05 In physical terms, Mexico's ports are more important for cabotage or sea-going dolmestic trade which, in recent yer-s, has been abo-ut 14.0-15.0 million tons p.a., or about 55%J of all tonnages moving through the ports, uver 95/ of this domestic trade was in oil and petroleum products, witn about tw˘o-thirds consisting of movements between Gulf coast ports and one-thirdl between ports on the Pacific coast. 1/ Small, but potentially important, volumes of fruit are now being air- freighted to Canada and Europe. -2- .uo A number of forces are leading the Mexican authorities to pay greater attention to the coastal areas generally and to the implications for ports in particular. Among these are: a) continuing population pressure and the need to reduce concentration on the central plateau; b) the employment potential of the "Free Port" areas; c) the limited scope for further import substitution and the need to develop export outlets to absorb the surplus produce capacity that has been built up and to stimulate the industries involved to greater efficiency; d) the ability of parts of the agricultural sector to pro- duce exportable surpluses. though there is still likely to be a general problem of feeding the rapidly increas- ina population: e) a growing recoagnition that fishing can not only provide more protein for home consumption but also offer export earnirw onportunities% f) an awareness that Mexico. bv its Leogranhica- nosition. could be a land-bridge for container traffic, specifi- cally between Eurone and the Far East or as nart of a growing trade relationship between the Caribbean area generallv and JanAn; g) the relative economnis of moving petroleu1m products by tanker as opposed to other modes in parts of the inter- nal tradie; qnc-L - ----- ---7J h the) 1 stead yrowth in tourists seeking suin, sa- nd .d sailing. 1.07 The Government recognizes the need to increase exports.i/ In addition to ea -v.7,-A A+Qr of _n=or promotio 4+ I-A-+ -t - - - sS> - 4 -- 4--.z] -v c .. 'w s z_vj VLIIJ L/.L'.ħ wħ ^1 Ul VE v I U *L V A .J j4t J.L LJUV " W IIdlJ lVI UD. C2a.L missions of Mexican businessmen abroad -- particalarly to South America. There is also a growlng awareness that Mexico could be an J-iportant suppIlerU of raw cotton, feed grains and soy beans, among other things, to Japan. In return, Japan could supply capiual goods and other eq-uipment neeued in rexico s development -- provided policy and administrative22hanges were made by both c0-L-ntr-ies tLo f'a c-i L 'U tU t1rUde bet-wleen1- t1Wmse_L-ets. 1/ " ... it is indispensable to augment simultaneously the supply of goods and services for export Pand7 more unity and direction will have to be given to the general promotional policies for export". A. Ortiz M4ena, "Stabilizing Development", a paper presented to the IBRD Annual fleeting, September 1969. 2/ "liexico Is Dilemma in Economic Development and the Japarnese Solution", L. Iiollerman, Inter-American Economic Affairs, Vol, 23, Autumn 1969, No. 2, pp. 75-88. - 3 - 1.08 It is against this background that the present po'icies, adminis- tration, operations and capacity of the Mexdcan port system must be seen, History has played its role; the future is the challenge. II. POLICY, PLANNID,G AWD ADM4IJISTRATION A. Policy 2.01 IMIexico's ports are perhaps the most unorganized and technically least efficient part of the transport sector. That they have hot inhibited past economic growth is accidental. In the future, ho-wever, they must be more efficient and have the capacity to meet the growiLng needs of inter- national trade with a minimum use of resources. In addition, since the ports can generate substantial revenues (including foreign exchange) by effective planning and efficient operations their calls on the Federal budget and the nation's debt servicing ability can be minimized. 2.02 The mission recognizes that to bring about the changes which are needed and discussed below will not be easy. Miore specific policy indications than now exists, together -writh substantial improvements in port planning, administration and operations, will be necessary. These will require major political decisions and, perhaps, some steady monitoring by the Th-inistry ci the Presidency to see they are effectively imnplemented. 2.03 Existing general policy statements such as "integration of the ports into the national transport svstem": raising the level of efficiency in pcrt operations"; "encouraging the development of the merchalnt marine", are insuf- ficient guides to the Government or the Minister of the iNavv. ats the Cabinet Membver responsible for most port matters, to assess whethier progress is being made and whether it. is acceptable firrab1e and 1egitimate as such state- ments may be as direction indicators, they necessarily involve a variety of nnli rnr m n+.+g.rc! T-.T1 r'- - n +ilvrn hnatre n;lir -Hifr.-i nnrl /nAmi n; ' .t.i: r nnl i r , rir organizational implications. 2.04 1Thether the Ministry of the 11avy, for example, with its divided ite n aval,e+ --r nava-l air-ati-on, vnercha-InM-t M-ine. shi-J ..ar-d a n -i art-i +M r' exploration matters as wqell as the construction and maintenance of port works, 1 vWu O1 . v'.. U1 4. V E . Uicuu all A L J 4 V t " .). V II U Lv V 4.J.LdII V'- U I pV_U L Ci1. U does not seem to have been the subject of much public discussion. Nor does 4->,e question appea tuo hlave lbeen ILIloroughl'y ex.-M-ned as tuo -Wffether W tZ po.-tsj should be self-financing -- as, in theory, are the railways, airports, airlires and toll roads. SimlrHly, there seems to have been no questioning of the desirability or effectiveness of the M,1inistry of Communications and Transport as its primle in,volvemenit ln port matters -- setting taillffs ld charges for various port services, or whether it has consciously ancd successfully used these pricing powers to achieve objectives in the porb sector. Nor do any clear instructions appear to exist as to the criteria oIr manner by which port investments are to be economicaily evaluated. Finally, there is no apparent evidence of a serious examination of the efficiency of the system whereby numerous workers' syndicates (unions) and cooperatives handle port cargo with whatever equipment they can finance themselves from their limited resources. 2.05 The above issues may, in fact, have been exwnined within the Government. Public i4SCuSSion anrd the p, --ca+tion of aulthoritativee govern- ment enquiries into such matters, however, is not in the tradition of Mexico. If they have been exaiTrned, no indUication of serious irnvesstigations and measurement of the relative costs and benefits was made to the mission. Accordingly, the mission has had to interpret whe current scene from la-gely its own brief observations and to make its conments and recommendations on this basis. B. Port Organization 2.06 The rMinistry of the Navy, in addition to its defense and associated functions, is the authority primarily responsible for the development of the "fiscal1, sea ports (i.e. those where customs duties are collected). The five so-called "Free" ports come under the Ministry of Finance. This report mairly concentrates on the "fiscal"! ports; hereafter, unless specified, as the ports, 2.07 FLgure 1 indicates the present organizational structure of the YLinistry. From this it will be seen that three of the nine Departments (Direccions - General) and a PlanLing Group (Junta de Planeacion) are most closely concerned with civil port works and administration. 2.08 The Planning Group is legally charged with a) studying and giving its opinion on projects; b) studying the programs of the Federal Government and other agencies which are related to maritime and port matters; and c) coordinating the Ministry's activities to ensure that they are consistent with approved programs. The Department of HEritime works is responsible for the planning, design, execution and maintenance of port works as well as coastal and river protection works. In undertaking these tasks it is given responsibiLity for studying the needs of existing ports and of elaborating plans for complementary port installations, e.g. buildings, warehouses, etce. The Department of Dredging has broadly similar functions in relation to dredging requirements for lakes. lagoons. canals, navigable waterways and port entrance channels. Finally, the Department of Port Administration Is expected to a) coordinate and control activities in the ports; b) "bring about the maximum improvement in port installations"; c) plan the establish- ment of port administrations: d) offer its views on the system and level of charges for port and maritime services; and e) study the standards and means wherebv servi ces at each port can be improved, including studies of the zones of influence of the ports. 2.09 In terms of organization and functional allocations, therefore, a machinery exists at the central government level for achieving objectives irn the port sector. IJhether it functions efficiently depends, however, not only on the quality off sta-ff in the center but also on what actuallv happens in the ports. Coordinated planning and operations is particularly important in view of t-he numerous groups interested in V riO anqectS O port actnivitdies (Tahle 1). In practice, as the following paragraphs suggest, coordination is weak and operational efficiencr isr not high. In the mission's view, this is primarily the consequence of: - 6 - a) the low political priority given to the ports up to now, and a hezianqy to lace the poli ' issue involved in a major improvement effort; b) the limited experience and drive of officials in the cente-er to under tak-e at a I'gh professional leevel the planning and study functions which the law permits and expects. This, in part, has been conditioned by a) above; and, c) the absence of a single authority (institutionally or individually) with overall power in the ports themselves. C. Investment Planning 2.10 This is inadequately done and appears to have a lhigh political element in it, wgith efforts being made to provide each of the 17 seaboard States with a port of some significance. Until recently the absence of good port traffic statistics was an inhibiting factor. Now excellent statistical data is available on a computer basis as to origins and destinations by commodities, etc. and should be fully used in future project evaluations. There is limited evidence of any serious economic evaluation, in terms of benefit identification and measurement, in the projects that have been submitted to the Yi-nistry of the Presidency in recent years. As a result, iith limited staff numbers and staff experience, the Presidency has had to evaluate requests largely on a qualitative basis and, through its control of investment allocations, it has become, in effect, the key port planner. Hoi.~ever, it controls only one instrument directly and must work indirectly to improve port operations so as to avoid or limit capital investment needs. Its ability to influence the pricing of port services and thus improve the use of ports is limited. 2.11 Proposed port investments do not seem to receive adequate integration with the plans and timing for the improvement of other transport modes. For example, a project for the expansion and improvement of Acapulco port (includ- ing preliminary engineering) has been recently prepared. It does not, however, take full account of the costs, timing or Dossibilities of imnroving 1and transport to the hinterland, or of the possible environmental consequences on the large investments for tourism eAisting in Arcaptl co, The Planning Group in the Mavy Tdinistry is understandably concerned primarily with naval matters ancd as such, is staffed iTJ-th people of limited experience in both the economic and operational aspects of commercial port planning. This is nart of a gener-al situation in the 1 avey T-i stry - .There TP--1n of the Dep-art- m-t Directors and other senior officials in the iinistry are naval officers. It is quiestionable whether t-irns i d-nduci-e to a rigorous eco'rrac nal"tical approach to commercial port problems and projects. 2.12 There is some movement in the IMinistry to get operational planning sta-rtedo here a-in, however, 3 there is -n intern< '- c a---;on probem. anu a limited amount of experience which, to some extent, could be corrected by a properly conceived trirrng program (ncu-Ling workig spells in port aumin - istrations outside of Mexico). -7- - 7 III. PORT FACILITIES AND OPERATIONS A. Ger.er '- 3.0 riJ.thin the ports 4I.JJ- m of w hich bave exce'el JcL ent' -- operations are often inefficient with facilities poorly utilized and inade- cruaaUEly m.ai I.1V i . ned V r Jne U m a-or reason for ULs is .hat tlhere is rno single Lon,1 trolling authority or ind5vidual in a port who can be held responsible, other than in Sal Carlos, B.C..w Iħn each por-t there is a representative of the Navy Ministry - a Port Captain - who is directly responsible to the Minister. fI.s tasks are 'Lo police whe port; control pilotage; direct ships to particular piers and so on, Apparently, he is not obliged to report whether there is any- congestion in the port or to assess wnether, wnen and in what form new works or equipment is required. The main initiative for such improvements often comes from local merchants and shipping agents who put pressure on the Depart- ments' of Maritime IJorks and Dredging representatives in the ports. 3.02 There is also a Resident Engineer in the ports whose function is to coordinate all civil works building (including that of other Ministries and private agents). In practice, his authority appears limited and he can be by-passed. 3.03 The Port Captains and Resident Engineers are often either naval officers or "political" nominees. Since their period of tenure in any par. ticular port is often limited because of the six-year political cycle, this has the disadvantage of leading to a partial understanding of local conditions and a limited identification with local needs. B. Facilities 3.o4 Marine installations such as wharves, breakwaters, oil termirLal and other piers generally appear adeauate for present traffic and for that whichwil: reasonably develop through the forthcoming Presidential period (i.e. to 1976) Some capital investments. however, are needed in the ports if they are to improve efficiency and meet the changing technological scene in the shipping industry. Amon. these investments are the deepenine of entrance channels in selected ports and the epths alongside some particular piers; changes in the lavout of some ports; j the provision of more warehouse space the renewal and purchase of more cargo handling equipment; and the introduction of th: facilities renuired to provide for the handling of some container arnd rol-l-on- roll-off traffic. The mission's task was not to identify such investments on a port by port; or item bv it-em. basis nor to estimate in any deta1Ai the +.ti costs (including the foreign exchange component) involved. Some indications, however; are given below. 1/ In this port, the Director of the Department of Administration in the ..aI,,ry 1 *S ~A. -~ '.4,1.4.. ~k'JL. L'.J..LA.. Uj IJI C3L ... . V&.L , % h r J 4.J n N^ Afr- - st. hrIas -P-1" responsi-bi't- of 'l1 activites (eg h,n labor directly, pilotage, wharfage, tallying of cargo, policing, sVeLvedo)XIng., eto j olulther IJlICar customs. / Specific suggestions of the physical improvements for particular ports are gJv"en in Arnnex A. 3.05 There is an evident lack of coordination betwqeen the two main Depart- L B som,epo.-ts. For VI' t:AaJ1Yg. -jle, capitl rugiuLg 6llay niot be LUn5.L1U iL w wh quay design, i.e. quays and sheds may be designed on the assumption of handling vessels of 30 ft. uraft anCd capacity but the cnannel deptns and depths along- side the berths may be only 20-25 ft. 3.06 Reportedly, the scheduling of maintenance dredging and the allocatior. of dredgers is not determined within the Ministry on an assessment of priority traffic needs. Perhaps for this reason, among others, PEMEX -- the national oil company -- contracts out for its own dredging needs. While this latter work seems to be done efficiently, it is carried out without adequate coordi- nation and consideration of the needs of other agencies. The "Free Ports" also meet their ovm dredging needs by contract. The mission was unable to determine the amount of dredging recently undertaken (or required in the near future) or to assess the level of efficiency. It would seem, however, that with a staff of over 300 administrative employees and nearly 1,400 operating employees, the Department; of Dredging could carry out substantially more work than was done in 1969,11 for example, even taking into account the wide dispersal of the ports. D. Maintenance 3.07 The mission's limited observations of a few ports suggests that while in particular ports there are some competent and concerned officials general maintenance is unsystematically carried out, and is frequently below the standards Hexico attains in other parts of the transport sector. To a large extent thLis is probably due to limited budgetary funds -- reflecting the low priority of the ports -- and the diversion of port generated revenues to other budget uses as well as to a lack of planned maintenance programs being submitted with supporting data and justifications. E. Cargo Handling 3.08 General cargo, and some bulk cargo, is usually handled by workers' syndicate-s (unions) which themselves may employ casuall labor. The syndicates operate under concessions granted by the Navy ilinistry, with the charges for the prarticrlar servien randereA haivn. vAn+nv A V-rr dJha M;n; +r ,fl wnziwi cations and Transport. In some cases, the syndicates have modest amounts of czirffnla ,iv iimov+. prcv1 ^hna=A uii+ of VWa to surch 1lowed for 4-h4 o ~~r.- ~ ~ ~-…- . '.'s . w...uux. s.,3 particular service charges. Local shipping agents may have small tractors and trailers an.d r.obile cra"es which) they, use 4'or +whei o.^ 4-Vswlnth port areas. Fortunately, the trend of conventional cargo ships to have i.oved hnLd.ing geaor.boar-d ' vhe LAAU sip nLLj. n.LL W ILLUze thlle r.eedLA for smaller lifting capacity dockside cranes in some of Mexico's ports. There is no capdbiLity of handlinL g Con-ta-lner t1-alflu CU aay Suale in the poIt-s and, reportedly, there is no very heavy lift crane in any Mexican port. V in value terms, Pesos 44.7 miiiion or US$3.O6 miilion. - 9 - 3.09 The present system of general cargo handling is labor intensive and fragmented among the smdicates. Since. for nmanple- in Vera Cruz no direct loading or unloading into trucks takes place perhaps five or six syndicates meay handle the cargo between the vehicle nd +.th saip.-- other than authorized trucks are not allowed to enter to pick up or deliver cargo by law. This delays ome canrgo movements and adds to costs. Direct loaLng and unloadine of rail-borne cargo is possible in some ports, but is likely to be charged thhe snmp rat+ as at other piers wThere r+;.Iple handl- g tak-es p i Ze Bagged cargo is generally lifted by machinery on board the ship, with the bags then being opened nnd +he cont+ernts poured intVo the sh p's hold. Though not a uncommon practice in other ports, and having the advantage of employing labor, it can be inefficient anAd costly because of the dela-s i,nvolved. Cr.-a1;-ve economic studies of this as compared with a more capital intensive system shouild be undertaken.. 3.10 There sees to be little -ir-ect supe--vis-on - of czaugo han-lin g u either the representatives of agents and shipping companies or by the syndicates0 The work garg structure uues not proviQe for an official foreman -- a "leader" may give instructions but he does not supervise or carry responsibility as would be practiced elsewhere. Under tne system employed productivity vanres widely by poits and the commodity composition handled. At Coatzacoalcos, for example, where a good deal of bagged cargo is handled, the average output is about 19 tons per hook hour and is good. By contrast, at Mazatlan, where much of the general cargo must be handled in small1ot pieces, average output is only 7 tons per hook hour. For the six main ports shown in Tab:Le 2 thie average figure is about 10 tons per hook hour, which is not particularly high. 3.11 Acceptable loading rates are attained for bulk mineral exports and for bulk liquLid cargoes. Similarly, where the loading of grain takes place from silos productivity is very good. The use of rail hopper cars for the direct loadirng of grains, however, is not practiced -- though its possibiLity is being examined by the railway authorities. Grains are one among a number of outbound cargoes which arrive by rail that may be held in freight cars until needed for loading on board ship. It is believed that as many as 5,000 box- cars are in daily use as warehouses in this way. This is not only an inefficient use of rail equipment -- while at the same time the railway is renting cars from U.S. railroads at a per diem rate -- but also can cause line congestion outside some ports because of the limited yard holding capacity in port areas and thus add to the delays of inbound cargo moving from the ports by rail. 3.12 The warehousing system is inadequate both in terms of the total ware- house space available and operating practices inside them. In the case of outbound cargo often there is no transit shed space available because it is full of inbound cargo that has not been cleared expeditiously by the Customs. Until recently the "free time" allowed for inbound cargo, either on the dock or in a transit shed, was 30 days. Though this has been reduced to 15 davs carao still accumulates, The poor use of shed space is caused in part by backlogs of unclaimed cargo or of cargo that has been subiect to legal di snute, so;ne-tiines for years, In part, it is also attributable to the time-consuming procedures employed by Customs and the general qhort-age of awnrehou_e and open stnrnae space. = 1- 3.13 The accumulation and cluttering up of port areas by cargo not only hVIpers the rmovemen of equipment in the ports but als9 compowlqds itself by contributing to poor work attitudes. Because of inadequate stacking and record ….eeplng proced.r-es, J. may be difficul to 'localte so.me mic-Inn-,V qui1kvly arnd thus involve the needlessly wasteful and costly shifting of cargo to find particular items. 3.14 in sum, therefore, the pict-ure of gen-eral cargo hand'ing =- which can be expected to grow if the exports of Mexican manufactured goods increases as expected -- is bleak, Fortuna`ely, there are a few cases where dedicated men are trying to do a sound job. These exceptions offer hope for what can be and must be done in tne future. IV. TRAFFIC PAST AND FUTURE A. ra:sj 4.01 The development of total port traf^fic bebween 1960-68 is gi.ven, in Table 3 by foreign trade and cabotage or domestic traffic while Table! 4 indicates the division by Gulf and Pacific Coast ports. They can be suiru-uZiu- ized as follows: 1960 1968 % inc. p.a. kiyllion tons) 1. Total all traffic all ports 13.4 28.1 51.5 2. Total foreign trade traffic 5.3 11.2 1C).0 3. Total domestic trade traffic 8.1 16.9 S'.5 4. Foreign Trade (i) Gulf Ports 3.43 5.77 6.7 (a) Exports 2.46 4.37 ,?.4 (b) Imports 0.97 1.40 4.6 (ii) Pacific Ports 1.88 51.1 (a) Exports 1.74 4.96 14.0 (b) Imports 0.14 0.47 16.3 5. Domestic Trade (i) Gulf Ports 5.31 12.02 1o.5 (ii) Pacific Ports 2.78 4.90 7.3 4.02 The doubling in domestic traffic is accounted for mainly by increas oil movements at Coatzacoalcos and Tampico in the Gulf and at Salina Cruz an.d Mazatlan on the Pacific. 4.03 Comparison of the 1961 and 1968 statistics shows that about 70% of inGrease in foreign trnde traffic is accounted for by greater volumees of sul- phur, fluospa.r, molasses, salt, corn and fresh fruits exports and phosphates imnorts0 Mnnv of these are builk cargo ideally suited to sea movement. J, On, a 1n1mmn ry ni oturer nf rora romnn.oi ti on A+. thA. 7 mnin nort.q in 1968 is as follows: - 12 - General Dry Bulk Dry Total Dry Oil Cargo r Carg Products All Traffic (Mill ion tons) Gulf Tampico 0.44 0.58 1.02 6.64 7.66 Coatzacoalcos 0.06 1.90 1.96 4.66 6.62 Vera Cruz 0.92 0.86 1.78 1.01 2.79 Sub-total 1.h2 3.3 Lh 76 12.31 17.07 Pacific Salina Cruz O.o0 0.0o 0.1 1.89 1.99 M4anzanillo 0.25 o.50 0.75 0.16 0.91 MThnzatTlhn nA On1< n On 7 n-o1 Guaymas 0.19 - 0.19 0.66 o.85 Sub-total 0.70 1.48 3.18 4.66 TOTAL 2.20 4.04 6.24 15.49 21.73 % of Total 10.1 18.65 28.7% 71.3%0 100.0- 4.o5 From the above figures it can be seen that the present proportion of general dry cargo is small (IC) tThil It+hat. ,,f il pnroicts is_ 717 nrd himTh dry cargo is 19%. Vera Cruz is the main general cargo port, with about two- thirds of its J - orts, d-f J + i+s e-or+s - .beAi- destr ned for or originating from the Mexico City area.- ';'en internal traffic is taken into account, 4.he Vera_ (-.z Z_T-4 -- 04 4t route is one -f 4the rSo4t 4-por-t4trnspor ~~..A.A.LJL', U.LIU VUħc. 'JA. U.LU 4IJt. _A '.U 1 AUtL' .LL3 U1JU tL UħL4- luiWJ S JJiijJ.LL'dIiU v5 ic QFIJħ u corridors in the country. Coatzacoalcos, by contrast, is primarily a port for 15J AJJt 4 0"J-U1,,_ I .L4 IILLħħJ.UII UU1J W- 11~kV~~1 U. prodjJ u c..ti the expor-t ofc supu-(. ulor, tLonsj)U% Ld wLe r,ovement ofL- oil pouts Lin coastal trade (4.5 million tons). Tampico, also on the Gulf coast, is pri- man-ily , oil product port (2.L4 milħlon tons in e4ports and 4.2 mil"lon tons in coastal trade) because of a major Pemex refinery located there. Its other rnaain pupos e 2 for the use of minerai exports (iħuospar, calcium, iead, zinc and sodium).- It is, therefore, primarily a bulk port and its improvement to cater for the growing size of tanKers and bulk carriers needs careful examina- tion, especially because of the hydrological implications. 4.o6 On the Pacific Coast, Manzanillo and Mazatlan are important for corn exports (350,000 tons and 100,000 tons) and for the unloading of oil produlcts needed in their hinterlands (120,000 tons and 423,000 tons). 4.07 The general importance of oil and petroleum product movements raises important issues regarding the use of tankers and pipelines by Pemex. Thesa are discussed separately in the section on this national oil company. 1/ Table 5 indicates total traffic growth at Vera Cruz. _/ Table 6 indicates total traffic growth at Tampico. 4.08 Passenger traffic by sea is unimportant even though it has increased 10-fold between 1960-67 to about 110,000. It is mainy- accounted for by ferry traffic between La Paz (Baja Cal-ifornia) and 1lazatlan and, more recenitly, between Puerto Juarez and the growing tourist center of isia de r5ujeres. B. FutLure 4.09 lNo soundly based analysis as to the volumes of future traffic by ports or commodities has been done by the Nlavy N5inistry. Projections to 1978 were ma(de available to the mission. These, however, cannot be used for general planning or specific project planning purpose. They are merely extrapolations of past total trends. So far as the mission could ascertain, they a:re not based on a study of the potential developments (internally and externaally) of the commodities now moving through the ports. In the case of coastal traffic they certainly do not take account of any changes in land transport which might divert traffic, particularly pipelines. 4.10 The result, therefore, is that those responsible for ports and their development cannot have a clear view on which to plan what is required, and where, in the near future. This deficiency must be remedied by serious studies of production trends and marketing possibilities. Experience else- where suggests there are dangers in this being done by a "Central Planning Office" wihich hands over the figures to the authorities responsible for ports. It also suggests that it is likely to be done best by those who are directly responsible. and particularly if they have a financial responsibility againbt which their performance can be tested. The results of their forecasting and the implications for port investments, however, must be assessed or scrutinizJed for reasonableness and acceptability by the investment approving authorities. A maior effort; theen-fore- wi11 be needed and it will renuire the iniection of economists and other staff into whatever agency is ultimately made respor.- ib1e for the ports= Somne of these stnff wmiuld h_ve to be assiened to the ports to gather economic intelligence from shipping agents and others as to futarre trends. Fortunately, the recently improvT statist-)l Gn data on traffic flows, composition and origins and destinations is a good basis on which to beri n 4.11 WThiTl the t.ask of imrn-rV-n- fpr.it iS nr^ifnity, it iS fiortiinaħ.y not of the highest urgency. There is excess capacity in the ports end a scope e3ists for 3 aor Jmprove.,e T,A 1in o a nTP111l h also ad +capac^t. Accordingly, there is time while these operational and other improvements are being cai - e- +Iout f,or tewr ' of forecas+ r to be+ p e i-si staffesd and undertaken. One conclusion of this, the mission believes, is that Mexico Aho-,,i 'bA e1xt hAyI h + h *sit't i n --weu ie nxYVr mrn^ inA, f; Y.A nvr= +man+a c,ir'1q m^ new ports or additional piers, wharves and breaklaaters for a year oIr two unbil 4-1,e eco.OM4 c staudies and eng-in^.er.ng i.liat;U- ons hlave beer. f-,, 'ly T.:or1Ced ou1^1 As an immediate investment strategy, therefore, the best approach wculd seem to bue to a) cor,cent-rat-e or. handling cand associ ate d eqUIp.menti ws;CI, II neces= sary, can be moved elsewhere; b) provide warehouse capacity where there is now an obvious shortiage; an-ud c) un-derta- e selective dredglng operatior.s and remodelling works. In other words, the mission considers that aboutj two years of harci preparation will be required to produce a irxeingf-ul, longer run por.t development program. Finally, since some of the skills needed are short or not avcilable, the Govermnent should consider specific technical as:istance from ouiitsiders for limited periods. - 14 - V. FINANCES A. General 5.01 The NIexican ports are not financially autonomous,-L-with accounts kept on a conmmercial basis. Records of revenues and expenditures, however, are kept in Mexico City but not in the ports themselves. Port user charges are levied by the Federal Government but are regarded as federal taxes and as such are paid to the Ministry of Finance as general budgetary receipts. The charges are levied according to Federal Government decrees, with the cur- rent scale dating from 1966 which replaced that which had been in force sine 1937. The Navy Ministry is not specifically charged with the initiative for proposing changes or for reviewing the levels set, though in practice some consultations take place between it and the hiUnistry of Finance. 5.02 Operating, general maintenance and maintenance dredging expenditures are determined and approved as part of the Ministry's allocation out of the national budget. Capital expenditures are approved as Dart of the normal governmental process by the Kinistry of the Presidency and Tinistry of Finroicc, Balance sheets Are not maintained for nny oft' "fi5cal" ports. A reI'r1 of the value of fixed assets was not available to the mission and probably dces not exist. A financial analvsis comnnarible to that done -in Vol. II for the railways is not, therefore, possible. 5.03 Navy M1inistry figures indicate investments in the ports totalling Pesos L481h milin (TS$39 million) in the period 196A-6O (Tnhle 7). Thls excludes investment in the Free Ports and in cargo handling equipment bought by the various labor concession.res The most important single lvsrer.t was for improvements at the Pacific port of Manzanillo (US$10 million eq en t) M4I s- troy -f h e, Pre s'i4d e n cy figur-n ur e s fo lnvem,2n"-L- A-L 4 2Sort activities in the same period are Pesos 786 million (US$63 million).2/ The iffer-ncea in figues is acou.ted f -o p l bervicing paym.ents ma-e ~~ ~ ..L..L. ~ ~ ~ .L. AUJU.~ .L 1j ," LU.LJ Lj)' LL-l U ;LV-L..,I aya luo7i by the Federal Government on internal and external loans used in the ports 5.oh InformLat1ion given by the Navy r'luSly shows thwat if nnew debt commitments are made there will be no debt servicing payments after 1973 Ahen the foi-.lumiig Sched-le of repayiments is finished: Debt 1970 1971 j972 1973 (Pesos M4illions) Internal Credits 112.7 5.3 - - External Credits 7.9 7.6 7.u z2 Total 120.6 12.9 7.0 2.7 This is probably inaccurate since information from other sources indicates thar, in 1969, for example, new commitments totalling US$6.52 equivalent were entered into for new dredgers from France. 1/ Excluding the Free Ports which are a separate operation with some autonomy. c./ 1IħC.LUSIve of ouIJ It.U SUi I I JILL'II ony WitL t IeALLj LLsty ul U0o.rZilucat-La10s 3anu Transport. 3. Federal Revenues and Expenses 5.05 Statements of revenues and expenses for all and some of the nmain ports for 1968 and 1969 are given in Tables 8 and 9. The large increase in total revenues from Pesos 31 million in 1968 to Pesos 53 million in 1969 is almost entirely accounted for by more warehousing rents as a result of the reduction in "free time" for cargo from 30 to 15 days. It is, incidentally, indicative of the backlog in cargo which existed when the change was mcde and of slow clearance procedures. 5.o6 In 1969 revenues exceeded expenses (excluding depreciation and dredging) in the ports but were marginally less for the total of all other ports. An accurate breakdown of dredging expenses by ports was not made available. It is unclear, therefore, whether particular main ports are in surplus or deficit. It looks, however, as if Vera Cruz is in surplus. For all ports together, when dredging is included, there is in 1969 a marginal excess of expenses over revenues -- Pesos 8 million (us$640,ooo). 5.07 These revenues consist of traffic or nort diues (based on net regis- tered tonnage of ships), dock-age or mooring charges (based on the length of ship an d the time it stays in port) and wTharf age charges (based on merchanriise loaded or discharged from vessels). The current scales are set out in Table 10. They indicate a) charges are low; eg., uharfage on import/export c o is Pesos 3 or US024 per ton and USq3 per ton on coastal cargo; b) they are nt-t cost reflecting; e.g.) trcvic4 due onn shp va.4 o y withn, their net registered tonnage (nrt) but also whether the ship is foreign or M4exican; is comingcr -Pisnc,- - - from or. gor. tof na fore -r n.s port;4- 4 in 1r n ..1at; is carrying imports or exports -- on exports the current rate of 1 Pescs (TJ)prtonAA of- cargo lo 1- A- is lo;I) h. eN 4.w- ilru and - - - -tin--' exceptions; e.g., coastal cargo and mail are exempt from wharfage. 5.08 The revenues also consist of warehousing rents. After 15 days of fLree t-nie, goods pay - Peo 6- per ton per - dayfo- LI-- frst -30 - das e.o ħJ~0~ JJii7 6iIuvu Yady I =iU z ',j~ J 1,01ħ )ui ħ P"ħ-Uy -U.L- U41u ħħL-L.L:i .3J Ua.y5, rXjUbU y; per ton per day for the next 30 days and Pesos 12 per ton per day thereafter. IMns, too e- low- as - 'Im - d ----- -with r-&-,v - ports. -LJ1ZO . UVUU, d.~ L~ UVY dLO k.AJ1UjiJcL U W'.JLIl IlidLħy kJUħLiUZ >.09 Th Ilbe case fVrL dai nii : .11 ,LALIJ UħiL'JL. 1, Qd chargU5 Ue discU-ssU aboVVV could well be made to take into account rising costs and particularly labor costUs Whicl i craU1'UZiSU evey two yecas as pat of the pr-esent latioral practiuc and will increase still further because of the 1970 new Labor Law. It is not recoi-iended, however, that this should take place arbitrarily now. Soeie increase in warehouse charges though would seem desirable, especially if dorne in ute context oI a program to provide more and better warehouse faci iti Fe-, The mission recommends that present structure and level of charges should be thoroughly reviewed and adjustments made as part oI major new policy change and reorganization of port responsibilities. C. Cargo Handling and Other Charges 5.10 As indicated earlier a variety of port services -- pilotage, tag service, stevedoring, wharf handling, etc. -- are provided by the workers' syndicates under concessions granted by the Navy i4inistry. Pilotage iE' com- pulsory for foreign vessels of over 2,500 nrt, iith the fees being paid directly to the pilots who are self-erfployed. Stevedorirng charges for ocear traffic are negotiated privately between the syndicate and shipping compar-ios. Coastal stevedoring, however, and other shore handling charges, etc. are fixed by the Tariff Departrmient of the linistry of Cormunications and Transport to nhom the syndicates make representations when they believe an increase is justified. This, in practice, is every two years as the rational Commission for I4inimum Incomes reports on this basis to the Federal Government. Based on its findings general wage increases take place in governmental services~ This procedure does not mean that the wages of port workers are kept to the national minimum, but that their wages (i.e. cargo handling charges) rise ir step writh increase in the minimum wage and do not reflect any changes in productivity. There is some incentive effect, however, wJith the charges beirit based on tonnage. 5.11 A selection of minimum, maximum and average cargo handling charges at six selected main ports is given in Table 2. To illustrate the impact of all port and other charges, the costs incurred by three ships calling at Vera Cruz in late 1969 are set out in Table 11 and sumnarized as follows: Cost per ton Handled (Pesos) Ship 11o. 1 Ship 'No. 2 Ship No. 3 Port Charges 2.80 2.37 32.34 Cargo Charges 57.14 68.15 63.21 Hiscellaneous 1.LL 1.30 3.71 Total 61.38 71.82 99.26 (US) (IL. g0) (5.75) (7,95) Shin Sizte (nrt) 1,1Ut 1,1h2 4j134 Tons Handled 1,31i4 1,778 h13 5.12 The -hove figuireq it. shc,1zd eh notpeid nrp nnt the "net. adi,-Ana1 costs" over and above ocean shipping charges borne by each ton of cargo, since sor.eA ofC the c~yc items A ma>ng up~~ t+.Ii tota-1~y~v,~l ar no zrnl i nclude i nd~ i shipprg- f'reigr;+ rates.1/ They are given solely to indicate the difficulty of easy generalization about the effect of port pricing or user charges on the final delivered prices of goods and the elasticity of demand both for goods and port use. Much depends o +h _e pa 4 A --_4- 4A-1,4S-\ AAA1 w 4-,r- -P I- AI A _4_"n 1-|1 _ J A. 1 V.L U LA- LL .J.V U oZz VL i .L ") 4. 1 UJYFj VJ1 %.LLLSU .1Ul' l> 1Jt n..L.- of ships, whether overtime is required to clear cargo through Customs, etc. For exaIiple. sILUP -o. 3) was thr-tee ti_1mes -L4i size -- l. XI - 90. I -d LiLLħUII pilotage and tug service charges 6.5 times greater but i-t only handled 413 tons as compared wJith 1,314 tons and req-uired much less overt-ime working. Thie effect was that the average costs met per ton of cargo for ship Ho. 3 was US$7.95 equivalent as compared wi th USQ4.Qu equivaient for snip N o. I. 1/ Also costs of subsequent handling after discharge from the ship are not included in these figuresl - 1I7 - 5.13 To ensure that Mexico's potential exports are price competitive, close analysis is required of the Impact of inter-nal transport costs and port handling and other charges on the c.i.f. price of Mexican exports in foreign ports. Against this need to keep the costs of port services in total export prices low is the budgetary necessity to minimize the use of public funds by generating more income/revenues from the ports. In the mission's view a modest increase in the total revenues from port dues, dockage and wharfage (Pesos 14.5 million in 1969) is unlikely to have any significant effect on export competitiveness, i.e. the problems associated with increasing i4exicanl exports lies elsewrhere. Similarly, the mission believes that adjustments could wfell be made in a series of appropriately timed steps to increase revenues from warehousing and demurrage. In other words, the port secipr could be made to generate additional funds to meet needed investments1/ with- out hampering the desired export drive. 1/ A description of possible improvement works, together with a very rough estilm-at.e of theAir costs and eouipIment n_eeded, is given in nnex A VI. TRECO10ENDATIONS 6.01 Gi-ven thI-at exporexpxpasion is an important elemlent iL national economic policy; that efficiency and economic criteria are to be increasingly dominant issues in the Government's attitude to ports; and that other than for liquid bulk cargo there is surplus capacity for the present pattern of traffic in each port, the following recommendations should be considered: (i) A National Ports Council should be created. The President of this Council would be the iTinister of the strengthened ,inistry of Transport, as recommended elsewrhere. The Council would be composed of senior representatives of the various I-mnistries involved in port matters (Finance, Agriculture, Commerce and Industry, Public 'Jorks, Patrimony, Fomento). Its broad tasks should be to detlermine port policy, subject to Presiden-tial approval; to develop, coordinate, approve and supervise programs to achieve t.he policy objec- tives; to review; budgets of the ports; to approve the selec- tion of advisory committees both to the Council itself and to particular ports. The Council wrould also be responsible for reviewing and recommending port user charges to the Ministry of Transport. These are now low and could be increased and generate substantial revenues which would finance an investment program, A professional Director should be appointed as the Council s chief executive w,ith the staff, autlhority and clear responsibility for gener- ating investment programs, budgets and controlling all port operations. (ii) In the first instance, the ports should be operated as a system on a commercial basis. Later, steps could be taken to consider whethor particular ports should be financially viable in their oiGm right, including the re-investment of financial suroluses and/or with borrowing powers, etc. An important step in this process would be to limit the Customs to their basic functions and to transfer control over the transit sheds and warehouses to the General vlariTagers .9in the ports These (GenrnI Mnanagi!rs should be appointed by the Council and given the full authority to e…ntrol nnr… mnn…ag all +. a i anrprtionn in the ports to which they are appointed. In -the first inc.nnc, +t.hey ollci hp ap-pine+d to the 10 or so most important ports with one of their tasks being to train others for eventualin appoint-1 n.t as Genea-l nav'r. elsewhere. The General Managers could have the benefit o1f tuLwo advisoJry col.r,Utvtees __ one consisti4r.g -of the agencies with a direct physical interest in port facilities, ar.d 4the1 othrrprsenin the -local 4-,ury eOg bus=__ C' LIU. UħJ~L VvIlU.J.ħV VLUA UJ L~ IAL.,L k,%iLUI1 U.J. Y , _ 0 o ~. n .:.L ness, banking, industry, agriculture, labor and the ship- ~J.)LL%, UUlihiIiUIl t~iY - 0 L ħjU ħ db V j W1i,_L d.t4 _LVt.;a. governments concerned (State and towm). In the more impor- tant ports the General Managers could have IDepart-ImenDt Heads for the following functions -- operations, traffic, finance, engineerinrg and planni ng. (iii) A major staffing effort should be made to bring the best av al ale +oe = n rer, cn ss ince analysts, etc. into the staff of the Ports Council and 4 - 4- o 4- 7, trt as___ -4 __T A- .4. .A V JL UO d y ,ZWUA a.L ID I-;XcU 1ZLr D 1=IL AJO..Ldig-,11 XI. ;C -00 This effort must include an assessment of the training progr ,. s r.eedVed for 'key stoaf ,CU asUL. well dS X for stvedores and longshoremen in the ports. It will also require a U~I~,L LLLdL,UL1 U.* ILJU- LiC- .LUJ._ -U g -'I.! -J. bL,.L-P. (including consultants) to advise on port operating m,et,,ods to install accounting and nranagexnen 0 control systems, to carry out traffic studies and, if necessary, to value port assets. (iv) Tht appropriate strategy for port development should be to put the following ports -- Vera Cruz, Sal.ina Cruz, Coatzacoalcos, Guaymas, iviazatlan and Tampico -- into first class condition as a priority. The extent and timing of urgent dredging work required should be determined0 (v) Selective investments should be made at a number of ports including Vera Cruz and Tampico, as indicated in Annex A. Vera Cruz is and must continue to be regarded as the premier east coast point of entry to Mexico. It is strongly recor- mended, therefore,that neither money nor energy be invested in developing an alternative new general cargo port to it at Tampico. Other than for PEMEX's needs, the existing facil- ities at Tampico can be extended, altered and modernized to take care of general and dry bulk cargo needs at the present site for long into the future. Satisfaction of PENEX's needs and the other improvements, however, will require careful studies of the hydrological and possible social cost impli- cations involved. (vi) The construction of new or expanded ports (e.g. at Topolobampo and Acapulco) should not be contemplated at this time, except if a major associated industrial or mining project requiring a special facility is firmly committed and justified, for example, at Las Truchas for a steel plant. In such cases, the port and other trans- port facilities must be included in the economic analysis of the particular investment project. (vii) Consideration should be given to the establishment of a port equipment leasing authority. This authority would buy equipment with the obiect of leasing it to the eargo handling syndicates; such equipment is needed for effi- cient oDerationq. In this wav eipnmn+t. cmild bhR l+.nn5t ardized, purchased on a volume basis and moved from port to nprt if demand changed. Leases should pronide for appropriate amortization and maintenance of the equipment. - 2- (viii) Heavy duty fixed and mobile equipment should be an invest- rrient Uugu""ILn wu.rvugu the rPorts Counucia and apprvnu aUs charges made for their use. This equipment would include items such as gantry cranes and heavy lift cranes. (ix) A minor general equipment program should be formulated. That is, firefighting and safety equipment needs upgrading and lighting, telephone and radio services need improvement. (x) Warehouses should be provided to relieve the present con- gestion in the transit sheds. Since, however, a full pro- gram of installation will take time, the present 15 days of free time for imports should be reduced only to 10 days, fith penalty demurrage rates on a rising scale for the next 5 days and goods then transferred to warehouses or other storage space at the cargo otsner's cost. For exports the same free time should be allowed - 15 days - at a different scale of demurrage rates. If after 25 days cargo has not been shipped, it should be moved back to warehouses and charged the full warehouse rent rate. (xi) The present regulations prohibiting the entry of trucks into port areas should be removed. (xii) Studies a) The possibility of a joint international port/ industrial area at Matamoros (Mexico) and Brownsville (USA) should be examined. b) The potential economic growth and transport reauire- ments (including port implications) are required for the followino corridors -- Mexico Citv/Vera Cruz; Guadalajara/Manzanillo; Coatzacoalcos/Salina Cruza Monterrev/Tanni co. c) The notpntiAI nnnd fnenihilitv of rivpr tranpnort needs preliminary investigation. d) An examination of the "interface" problem -- i.e. the transfer point of one mode of t-ransport to another. In some ports it is probable that the cost of moving eargo fro. the port gates to the ship's side exceeds that of moving it from inland to the port gate, and e) A stu- of the feasibility- of using barge systems to improve coastal transport since Mexican shipyards are capah'le of Ibulka ng good b Kares andL 4town bocatus. 1iIi\J A POSSIBLE IIVESTMEENT/IMPROVEi2E1T PROGRAHi The mission has attempted on the basis of its visits to the 7 more important ports to prepare a rough outline, with tentative cost estimates, of the investmenits that might be needed to accompany and make effective its more general recoirmendations. The total estimated cost of such a program is about Pesos 560 million (US$45 million), as in the following Table. It is stressed, however, that these are based on broad engineering judgements, without the benefits of the technical and economic studies which would be required for investment decision purposes and for foreign financing. Neevertheless, it is believed they provide an operational framework within which to tackle the needed improvements in the M4exican port scene. Attachment October 14, 1970 :: . -7 2,ear vort Inves'.,ent P-rt .rau .~ ~ ~ ~ ~~~~ I __ _ p_ _ _ _~ TamDico V. Cruz Contzocoalcos S. Cruz Punzanillo Mlazatlan Guayman Total 1. ,ua.- (Lineal feet) at (2000) (1200) (600) (4000) (600,) (600) US$2,000 per ft - $ mil'Lion 4.ou 3.4h 1 .20 8.o0 - 1 .20 1 .20 19.00 2. W-arehouses ('000 sq f't) at- (100) (1Y0) (50) - (5() (50) (50) US .09 per sc ft - , million 3.50 o.5Ci 0.215 0.25 0.2, 0.25 2.00 3. EredEing (m2 mil-Lion) at (1 .0' (10.0' (1.0)10(1 .0) (1 .0) (1 .0) US$ per m- - $, mil'Lion °.4° c.46 0.40L o.40 o.40 o. 4.40 0.40 0.40 2.80 4~. Fa-:'l-'U.'nwav relocation 0 o.25 0.25 00. 2.2 0.50 - 0.50 0.25 2.00 K. *c,J.2imert ! 0.70 1 6 1.5ii 1-50o 0.75 0.5( 0.50 6. Container Facilities " 0.50i *5 oi.50 0.5( 0.50 - - 2.50 7. Silos /-'Ie vats 1 t.Krs- 1 .50 33.C0 :. ,e; Sneza 1 ..K - - - - - 0.50 D e .oii ion 0.25 o.5c - 0.5o - - - 1 .25 Total ,, 5.55 -.S 4.ic 11.4( 3.40 2.81 2.60 40.C5 Continge-.nc[- 4.[5 October 14, 197C TABLE 1 =EXCO Parties Principally Interested in Port Matters 1. Ministries Navy - engineering, operations, dredging, administration, etc. Transnort - road and rail IAnnpq nnd pricing o f port servinces Public Works - some construction (mainly buildings) Finance - nuRtom.s and budgetanr control Agriculture - inspection services 14Halth. - miiqrnintrina serv, Patrimony - ownership of federal property "Fom.ento" - general economic development Commerce - documentation and interests of port users Tnhror - wages and working c Interior - immigration/emigration TouriSr", - ^rĥuise shUp require -p-4- ......, 4. t 2. Decentralized Organizations Free FPort Authority - free ports Rai'lwtays - access and cargo rmjovem-,ents Toll Road and Bridge Authority - bridges over waterways and ferries Pemex ~ħIS- ol L tanker- tuJU d socħtALeU aCiLVi.ħtieb 3. Other Parties State Governors - development planning, etc. rMAUnicipalities - development planning, etc. Chambers of Commerce - user interests Shipping LnesU - user interestsLU October 13, 1970 TABLE 2 Port Charges and Productivity Rates at Selected Ports - 1968 Port Cargo Handling Charges per ton (Pesos) Tons Per US $ Hook Stevedoring Wharfhandling Total Equivalent Hour Veracruz: :Imports IMaximum 24.2 31.5 55.7 4.46 14.4 Average 2h.2 21.0 h5.2 3.62 10.0 Minimum 24.2 13.4 37.6 3.01 5.7 Exports Ifaximum 24.2 18.2 42.4 3.39 14.6 Average 24h2 15.1 39.3 3 _I 10.0 llinimu'm 24.2 11.9 36.1 2.89 5.7 Tampico Maximum 9. 27.8 36.9 2.95 1f.l Average 9.1 22.5 31.6 2.53 9.8 Minimum 9.1 12=8 21.9 175 66 Goatzacoalcos~ Maximum 5.2 27.0 32.2 2.58 23.7 Average 5.2 16.5 91.7 1.7), 19.1 Yvinimum 5.2 9.5 14.7 1.18 14.4 Mazatlan M-n-ym-im 7 r11 n7r 10n 1 ct 1' IQ Average 7.5 10.3 17.8 1.42 6.9 IMi ni Trrn 7. If.1 16. .3 . Mlaximrum 5.4 14.1 19.5 1.56 15.8 A ve_ - K I . 1. -i nI -i ca . -I,) Q .sGX :;.4 LV*. -L,.v .4 1C- .U Minimum 5.4 8.3 13.7 1.10 9.7 Acapulco Ju1d.. if argo F o re- - L'' J.* )4 1.4. 7 V.02 o .88 U.U o.LU Coastal 0.01 - 0.01 0.03 0.03 0.04 0.01 0!O2 Total 0.55 0.41 0.48 o.68 1.05 0.92 1.06 0.86 3. Oil Products Foreign 0.16 0.11 0.29 0.27 0.31 0.28 0.36 0.31 Coastal f1.09 0.97 0.8 0.77 0.75 0.63 0.50 0.71 I0 U aL 1..e i.uo 1.17 1.04 1.06 0.91 o.86 1.02 4. A*iiħ Gargo Foreign 1.36 1.09 1.41 1.60 2.00 1.91 2.07 2.C1 Coastal 1.17 1.03 0.95 0.86 o.84 0.75 0.56 0.78 Total 2.53 2.12 2.36 2.46 2.84 2.66 2.63 2.79 % of all cargo 10.0% at all ports October 13, 1970 TABLE 6 LUTXICO Port Trafff ic - Tm.nieo (1961 - 68) (metric tons - millions) Cargo Type 1961 1962 1963 1964 1965 1966 1967 1968 1. Pry Cargo Foreign 0.33 0.35 0.35 0.34 0.48 o.46 0.40 0.39 Coastal 0.09 0.03 0.03 0.03 0.03 0.04 0.03 o.o6 Total 0.42 0.38 0.38 0.37 0.51 0.50 0.43 0o45 2. Bulk Cargo Foreign 0.25 0.29 0.56 0.72 o.64 0.57 0.49 0.57 Coastal 0.02 - 0.01 - 0.05 0.02 - 0.01 Total 0.27 0.29 0.57 0.72 o.69 0.59 0.4s9 058 3. Oil Products Foreign 2.34 2.86 2.89 2.68 3.03 2-74 2e63 2c5O Coastal 2.01 2.88 3.25 3.00 3.40 3.45 3.80 4.14 Total 4.35 4.74 6.14 5.68 6.43 6.39 6.43 6.6b 4. All Cargo Foreign 2.92 3.49 3.79 3.75 4.15 3.77 3.52 3.46 Coastal 2.21 2 91 3'28 3 03 3.48 3.51 3.83 4.20 Total 5 6.0,n 7.07 6.75 7.63 7.28 7.35 7.66 % of all cargo 27.2% at. al1 ports ro+u_V- -- na7 *fTRA5JP 7 MRXYICO Port Investments 1965 - 1969 (Pesos Millions) Port 1965 1966 5 o 1967 1968 019 oa Ensenada 13.3 11.8 6.7 0.1 0.8 32.7 San Carlos - 32.3 18.9 8.9 - 60.1 La Paz 0.3 0.2 0.1 0.6 2.1 3.3 Guaymas 4.9 0.6 6.o 1.5 2.8 15.3 Mazatlan 6.1 10.9 4.8 1.9 8.8 32.6 Puerto Vallarta - 0.5 - 0.4 24.9 25'.7 Manzanillo 7.1 8.0 7.5 53.9 50.5 127.1 Acapulco 0.6 00.2 9.5 3.1 1.7 lf7.1 Salina Cruz 0.1 - - 2.4 2.6 !,.O Tampico 4h4 11.8 8.7 5.1 7.5 37.5 Veracruz 4.o 3.0 2.2 4.1 11.2 24.5 Coatzacoalc:os 3.2 3.9) 2.5 0.7 2.2 12?.6 C. D. del Carmen 1.2 2.2 0.2 0.4 0.4 4 .4 Yukalpeten - 1.0 10.0 25.2 27.3 6.3.5 Other 3.2 1.1 3.5 2.6 13.3 23.7 48.4 87.5 80.6 110.9 156.1 48:3.6 Free Ports 5.5 5.4 7.4 16.6 17.0 5L.9 Grand Total 53.9 92.9 88 .0 127.5 173.1 535.5 Source: Secretaria de Ibrina October 13.. 1970 MEUIC0 FPrt Reveriues and IExenses (1268) (Pesos mi:Llion) ivenues Aaapule o GuaJrmL Manzanillo Mazatlan T!nrico Vetra Cruz Other Ports Total-L Port Dues 0.07 0.06 0,,71 0.10 0.19 0.29 0.26 1.05 Dockage 0.08 0.17 O,.40 oh.24 0.53 1.23 0.32 2.99 Wharfage 0.117 0.47 2.28 6.98 1.83 3.51 1.27 10.51 Warehousing?! 0.800 0.05 0,.45 o.60 1.73 6.67 0.35 10.63 On Fishing Vessels 0.16 0.19 0,,01 0.07 0.05 0.01 4.74 5.23 Other 0.0i7 0.03 0.00 0.06 0.02 0.01 0.26 0.47 Total/ 1.-3L °.97 3.,21 2.04 4.36 2.1.73 7.22 30.88 En)enses_ Personnel 0.75 0.41 0-,49 0.7'6 0.74 1.33 8.11 12.58 Operating 0.05 (0.08 0.11 0.10 0.06 0.17 1.12 1.69 Dredging3/ - - - - - - 40.38 Maintenance 0.059 0.07 0.22 0.1i4 0.30 0.80 0.58 :2.20 'o tal1 0.85, 0.55 0.,83 1,CIO 1.10 2.30 9.80 5S.85 Net, Revenues - Total- 0.46 C0.42 2239 1.C0 3.26 9.42 (1.58) (1,?598 21Totals do r-ot add because of rounding oile toe by 3ustoirm eakdown rrot avai'lablei by ports Soursce: Scc7retaria de Marina October 1.j, 197C CD PEXECC) Port Revenues andi Eense (1569) (Fesos million) ,wvr_-,Acapulco Gmanas anzan.110o Iazat2lAr Ts gv Vaera Cruz Other Ports Total Port Dues 0.08 0,06 0.]5 0.08 0.08 0.30 0.20 0o.96 Dockage 0.12 0,3 0.25 0.25 0.72 1.35 0.35 3 47 Whuarfage 0.26 0.81 1.84 0. 73 1,63 31.96 1.1L 10.36 Warehousingl/ 3.34 0.07 2.Ir8 0.57' 5.19! 159. 96 0.82 32.72 On Fishing Vease2ls 0.13 0.18 0.01 0.06 0.05 C0.03 4.88 5.37 Ot}lmr 0.07 o.o6 0.(PO 0.04 0.02 0.01 0.43 o.64 Total--/ 4-00 1.52 502 1.75 7.69 25.60 4.82 Expense s Personrel 0.75 o.36 0.49 0.6s 0.76, 1 33 8.69 13.06 Operating o.06 0.03 0.04 0.15; 0.05 0.10 1 .18 1.61 Dredgingl/ - - - - - 44.66 Ma.-nteriance 0.18 0.07 0.23 o.o8 0.35 1.18 0.40 2.50 Tota2lV 1.00 0.47 0.76 0.92 1.l16 2.60 10.27 61.83 Net Rewenues - Total-- 3,C 1.o6 4.27 0.84 6.53 2,4410 L/Tnt^ln will nrt AAd becUse e.f rominding /Collected by Custon /13reakdown by ports not available Source: Secretaria cle MErina October 13, 197C T' ATT V I n Page 1 POrt Unar Chmas (Decree-Law of April 28. 1966) A. Traffic Dues. (i) Foreign going vessels with cargo for a Mbxican port pay at the port of discharge: Mexican Pesos U.S. Cents up to 500 N.R.T. per 10 tons 1.20 9.6 501-1O00 NX.RT. per 10 tons 1.00 8.0 5,000 NeRoT. per 10 tons o.60 4.8 10,000 N.RoT. per 10 tons 0.40 3.2 over 10,000 N.R,T. per 10 tons 0.20 1.6 (ii) Foreign going vessels with cargo for a Mexicanpmit, coming from another National Part, pay at the port of discharge: Mxican Pesos U.S. Cents up to 500 N.R.T. per 10 tons 1.00 8.0 501-1,000 N.R.T. per 10 tons 0.80 6.4 1,001-5,000 N.R.T. per 10 tons 0.40 3.2 5,001-10,000 N.R.T. per 10 tons 0.20 1.6 over 10,000 N.R.T. per 10 tons 0.10 0.8 (iii) Vessels coming from another National Port with cargo originating abroad pay according to (i) above. (iv) Vessels from abroad entering in ballast pay 50 per cent of the scale -in (i abo (vc) Foreia egoingc veasacla P"roy srnotherM Nain ml Port+ dbn+_teinm iD 1-alIIma+ pay 50 per cent of scale (ii) above. (vi) Foreign going vessels leaving with cargo for another National Port pay at the port of loading: up to 500 N.R.T. per 10 tons 2.00 16 501-LAU00 N.R.T. per 10 tons 1.>0 12 1,001-5,000 N.R.T. per 10 tons 1.00 8 If nnl-3 nun *U*Se rkr 0t UonS 0.50 4 over 10,000 N.R.T. per 10 tons 0.40 3.2 (vii) Foreign going vessels leaving in bAllast for anotlher National Port, pay scale (vi). (viii) Vessels leaving with export cargo, loaded for export or transhipment, pay: Per ton of export cargo loaded Mexican $ 1.00, U.S. $ 0.08. TABLE 1 0 Exe3ptions: a) Warships, M&xican or foreign. b) Vessels exclusively on Mexican or foreign government service, o) Vessels calling out of necessity. d) Submarine cable vessels. e) Vessels docking for repairs or registration. f) Fishing vesei8s serving Mexico. g) Pleasure yachts. hJ) Vessels on scientific or humanitarian aHerrice. B. Mooring Charges. Vessels moored alongside federal quays pay p'r 24 hours (or fractaLon - -- - n.. - 'I- 1 - --t ^^. 4 IT it C . d A n ~ over 15 minuter j: I-r L nM-L.rJA LeUngth rxA.LUwIl $P -OOU'I U.O. $ v4.4. nx.emptions: a) Warsips, Mexical or for-eign. b) Vessels on Mexican Federal Government service. c) oiuzuu?ifl6 cable 8ships. d) Scientific and humanitarian vessels. C. Wharfage. a) At wharves built or repaired out of federal funds the charge on each ton of import or export cargo moved is Mexican $ 3.00, U.S. $ 0.24. b) Cargo from or to another national port, moved at coastal wharves is charged at Mexican $ 0.50 per ton, U.S. $ 0.04. Exemptions: a) Passengerst baggage. h) ConnrM1cA1 an*nIR navincr nn imnnr+. di1Anq c) Postal packets. d') Pn-k-Azran dischArgcd in nT-rn-0 ;) Fish products from fishing vessels. f?) ShinI atOren for use hb Shinp cr alling at+ the po rt g) Federal or state government effects. h) Goastal cargo. i) Salvage from wr*cks or accidents. October 13, 1970 TABLE 11 MEXICO Representative Charees on Vessels and Caran Port of Veracruz (lata '6&A/nr7tv 1Q70) Ship No. 1 Ship No. 2 Ship No.3 Port Charges Pilotage 1,973 2,626 5,081 Tug service - - 5,250 Lines: iriouring-unmooring 344 438 556 Launch and auto line 80 80 90 Tonnlage dues 132 131 866 Migration, Port Doctor 310 150 1,050 0vertIme to Customs and Port Authorities 300 300 300 Meals to Customs and Guard 560 480 160 Total Port Charges 3,700 4,205 13,358 Cargo Expenses Stevedoring - Discnarge - Straight Time 27,230 28,522 2,354 Stevedoring - Discharge _ Ovcrtime 293 1,938 500 Stevedoring - Loading - straight Time 9,825 22,878 9,408 Stevedoring - Loading - Overtime 2,863 2>5 ClerkinLg & Tally, Discnarging 4,561 3,471 999 Clerking & Tally, Discharging - Overtime 273 1,866 273 Clerking & Tally, Loading 960 1,805 538 Clerking & Tally, Loading - Overtime 45 1,222 391 Cargo Repairs 2,492 3,754 3i42 Dock Labor 5,511 21,331 4,211 Overtime to Customs 14,770 19,631 3,510 Labor Insurance 4,301 5,551 1,,50 Watching Cargo 2,149 4,115 791 Wharfage, Dockage 2,402 1,782 983 Sundries 207 470 100 Total Cargo Expense 75,040 121,199 26,105 Mi iscellaneous 1,883 2,313 13531 Total Costs 80,663 127j?17 0,n9o94 Tonnage Discharged 966 984 82 Tonnage Loaded 348 794 32 i. Tntal Tonnage Handled 1,314 1,778 L-'3 iornnage of1 Vessel uT 2316 2312 7146 MRT 1144 1142 4134 Total Costs per Ton of Cargo Handled - Pesos 61 72 99 - US$ 4.90 5.75 7.94 lr-4-Tt s 11 -ot ad eas fr-p wng 17,y _ Y' 'GiT I ~.1 OF Y1A?P1E -~~~- --- -- 1. MIN'I STE P]ADrNIdOG _ INSPECTOR GROUP GENERAL . _- ISUB-MINISTER I ~i -- [ 'MAY'OR" - -, FPUBLI C NA AL ADMIRAL OF …RELATIONS "KArOR THE NAVY L _ F___F ~~~~~~~~~~~RCAT NAVAL IrTN -r - - I -7- (X X _ NI-1 flRTNV1 J72~~.,7) ~ [ETCA~T) L II C NSTRU;. L DIN A s-i 1 LEGAL ] LOLJ LJ -Ž LZIZI I~IL 2 L _J L~2J PART B - PEMEX: PETROLEUM TRANSPORT I. SUPPLY FACTORS AFFECTING THE PLANNING OF TRANSiORT FACIIITIES A. Introduction 1 1 The imnortnnce of thp petroleum industry in the M4exican transport sector can be appreciated from twio facts: first, in 1969, the movement of crudle np+eroleum nndi refined nronduc+.sq in MNnran was almosnt 19 billion ton-kmni, as compared to a total of 21.5 billion ton-km of railway freight traffic; second, irinrcv+monts i transpor+- torage ind dqtrihution facilities by the state oil company, Petroleos 1Iexicanos (Pemex), averaged Pesos 616 r.llic: (n, irl TJQ0 mllivn annuallyr in +the 1965-6AQ periond or about two--thirds of the railways' average investments in both freight and psebgr - 4l1+4A- ;" +-h same --loel Pnm* ;. +ho lvaoest. single corpany in Latin America and ranked about number 70 in the worldl. 1.02 Pemex, a fully integrated oil company, has more than tripled it gros - sales in th 4 ast eleven 4ear toachieve a bl-4 1on dollar .Lo rIJ Lvoo OC - .LLI LW1V PC U V. V =IZ YV " U'.) CV1L.A V L.A _ - annual rate in early 1970. In effect, Pemex explores, produces, refines, uransporti arnd sells refined petDrolteur, nd1 -AA natUL CAl gas; r,or recntl :L has diversified into basic petrochemicals which now account for 10% of its gross revenue. Permexis poliCy is ntUU t genUerLt.L.e e^.AtJħ O, but tou the domestic market with refined products and gradually to substitute imlports o. petrochemicals. It will cousider exporting only those joint products or crudes, which by their special nature cannot be consumed domestically. Temulporary surpluses of intermIrediate petrochemical such as aromatics are also exported. In this sense the company's approach is conservationist; it believes that scarce physical resources must be co.- served to cover, over the longer run, the requirements of the domestic market. In view of the present reserves position, this approach appears to be logical with respect to petroleum products, but in the case of petro- chemicals, it should be reviewed fIromI time to time in the context of the changing world market demand and prices. 1.03 Pemex is responsible inter alia for transporting and distributing petroleum and natural gas proaucts, so as to meet the growing energy requirements of the Dhxican economy, to supply raw material inputs to the petrochemical industry and to cover its own needs Ior fuel. The compaiy's transport policy is t;o seek a rational transportation system that will move oil by the most economic mode or combination of modes of transport. For some products, the choice among modes is limited. For example, natura gas in the gaseous form can only be transported by pipeline, while residual fuel oil cannot be moved by pipeline unless the pipe is heated or the pro-- duct is made less viscous by the addition of a diluent such as kerosene. 1/ Excluding about 830 million cubic feet of gas daily. I Al. T.T4 4-l. 4J...1L..J.J.......4 . - .2 1- -' A .1_ 4'J. L.0V4 'lLULI h thes LL.irLLta.LtVion 2.J ILLnILL L,Iitn k.LJULcwUJ.y gi.Veb ħ.Lij p.rir LU.LvL.J to the movement of oil products by pipeline and then by tanker, once certIL-lain vol--12 conditions ha-ve beUen U.Uħ.leU. Lnese IUrrues of U1.a[1bPo.L^- are owned and controlled by Pemex itself and represent a decision to in- vest funds whether internally generated or externally financed. For the balance of its transport needs, approximately 36% in terms of tons originat- ing and 2h4 on the basis of ton kilometers, the company must depend on railways and roads although in some case s it may own or lease the vehicle fleet. I a policy can be distinguished between these two modes, it is one which aims at encouraging the use of road transport for the movement of distill ate products. These products, mainly gasoline, kerosene and diesel, are shipped over hauls of up to 400 kilometers. On a ton kilo- meter basis, railway costs are lower, but this consideration is outweighed in the view of Pemex on total distribution cost grounds by the flexibility, speed, and dependability of road transport services. The railways, however, are used preferably for residual fuel oil and for long-distance hauls of butane and propane gases (LFG): (also see Table 1) Volumes Transported by Mode - 1969 Tons % Ton-km % Average Distance (000) (million) Tankers-' 9,200 38.7 7,360 54.2 800 Pipelines2! 6,038 25.4 3,019 22.2 500 Railway 4.,911 20.7 2,160 15.9 440 Road 3,621 15.2 1,050 7.7 290 Total 23,770 100.0 13,589 100.0 1 Including crude petroleum 2/ -.4.- -4- 1_-, B.xLcludiong cfrudeuptroleu D.LjUUiL1_ħUXUi UI r.LL)UL U UħULJ 15LJe of I41e UIdJUor uc-ri.a.uiuħe~ ~ħħei.~ ~ng the ouncerta.i ti An transport facilities for oil and gas is related to the location of new producing fields. Broadly speaking, the production of both oil and gas is concentrated along the Gulf Coast of Mexico, the principal producing zones being Reynosa in the northeast, the Poza Rica area, inciuding the continental platform in the mid-east region, and the fields extending from Agua Duice to Comaicalco in the southeast. 1.06 Total production of crude petroleum and natural gas liquids in the past five years has increased by an average annual rate of 5.5% to 3- reach over 461,OOO barrels daily (bjd). Concurrently, the shift in production toward the southeast has become marked with the Tabasco and Isthmus fields now producing over 44% of total crude output: Crude Petroleum Production 1964 1969 1964 1969 Tthousand barrels/daily) (Percentage) Northeast 10.2 14.3 2.9 3.1 Central 204.1 241.0 57.6 52.2 Southeast 140.1 206.0 39.5 4h.7 Total 354.4 461.3 100.0 100.0 1.07 The above trend has implications for the transport sector; production in the southeast cannot all be processed locally, but must be shipped in growing volumes to Madero. In 1969, about 35,000 b/d of crude were being transDorted by tanker from Nanchital. the port serving Minatitlan. Nevertheless, one of the brightest spots in the production outlook which could reduce the pressure to move crude out of Minatitlani, is the prospect for offshore development. The Atun field was producing: 30,000 b/d by year-end and is exnected to reach 70,000 b/d dirinp 1970. The Arenque field offshore opposite Tampico is currently being drilled and there are other discoveries in the continental platform which have not yet been fully evaluated. Gulf coast offshore areas, with the preE-ent state of knowledcae are estimated to arirl so-m-e On1minn barrel of ni:l to reserves. Moreover, drilling has just commenced offshore on the Pacific coast some 50 miles from Salina Gruz. No oil has been founnd or the west coast of Mexico to date, but a discovery in the Salina Cruz area would have an impact on investment decisions in transport facilities crossing the Isthmus of Tehuantepec and, indeed, would alter the pattern of distribution of netroleum nroducts. C. Reserves of Oil and Gas 1.08 During the nast diecade. 1.86 billin hn-rrl ofQ ril hae bhcen discoveredl in Mexico. In this connection, two facts stand out which if they become permanent t.rends wil1 affec't 4.ho ln term future energ supply position of the country and modify the transport problem. These are (;I) tje 1iq er_ y rate T i+l ,Q, A , -o.r -tll 1- A- Q1 - ; _AA .Co, t 2 million barrels to 1.5 million barrels in the period 1964-69 as compared to the nreviouiis 10 lf a and (b)- the to i dw ,o ofl;ui -- r- . - -- a - - '..- -. UJA.S.u-& ts,. hydrocarbons reserves has fallen steadily from 25.7 yeas s in 1959 to 19.2 years by the end of 1969. The first case indicates that discovery costs are becoming higher in view of lower success ratios and probably deeper wells. Nevertheless, improved seismic methods, breakthroughs in drilling technology or the discovery of new large fiel(ds could help to offset this trend. In the second case, the decline in the reserves ratio shows that net additions to new reserves are lower than to-tal oil produced. Over the past 10 years, a total of 1.3h billion barrels of oil were extracted, while only 0.52 billion barrels were added to the stock of reserves on a net basis. At the end of 1969, total remaini.ng proved reserves amounted to 3.24 billion barrels (Table 2). The concept of the reserves ratio or theoretical duration of reserves must be qualified; it throvs no light on the rate at which oil can actually be withdrawn from the ground or on the volume of probable reserves which could be extracted by the employment of secondary recovery techniques. 1.09 Natural gas is located in the same general area. as oil, being produced either as dry gas or in association with liquids. At the end of 1969, total reserves amounted to 11.6 billion cubic feet of which over 4O% were situated in the south and about 35% in the Reynosa area. During the same year production rose to 1.67 billion cubic feet per day, roughly equivalent to 330,000 b/d of oil on a calory basis. As with liquid hydrocarbons, the reserves ratio has also declined. D. Location of Refineries 1.10 At the end of 1969, Pemex was operating six refiner-.s wflh a total distillation capacity of 552,000 b/d and cracking inst-.l...aticns to process 152,000 b/d. Two of the refineries, those at Poza Rica and Reynosa, are small and their zone of influence is negligible. Of the four major refineries, Minatitlan (175,000 b/d) and Nladero (169,000 b/d) are located near the source of production on the Gulf Coast. The two remaining refineries, Atzcapotzalco (90,000 b/d) and Salamanca (75,000 b/d) find their location inland near centers of consumntion. The dominant characteristic of the petroleum transport sector, which is the vary long haulage distances for refined products, arises as a consequence of the location of the two coastal refineries. For example, the zone of in- fluence of the Minatitlan refinerv covers the entire Pac-fic Coast of Mexico. The inland refineries must receive their crude input. by pipe- line and a new refinery to go on stream in the mid 19701s in the V cinity of Mexico City will also be supplied by this mode. 1.11 In response to market-demand, crude runs to stills rose to L63;000 b/d in 1969j renrpqentinry an 83%5 utilization of installed refinery capacity. Refinery policy is directed toward the more intensive processing of the barrels of crude in order to obtain- greater -ercenv+ge yield of higher value products and a lo-ver proportion of residual fuel oil. This aim is in line with overall petroleuma oli-r of conservi - hydrocarbons resources for domestic use; in the future less fuel oil will be availablle for export. The trends in refiningg can be appreciated from --e following table: Cracking Crude Res dual Fuel Total CaDacity Capacity Processed Oil Yield (thousand b/d) (% of Total) (thousand b/d) % 1969 311.2 21.5 287.0 2.0 1964 h56.0 25.2 6 .6o6 1969 552.0 27.5 h62.8 19761/ 1.022.0 37.7 698.6 -_ Estimated by Pemex. 1.12 Cne of the problems facing Pemex is the high sulfur content of the crude produced in the country. Desulfurization of diesel and kerosene fractions forms part of the refinery process at Minatitlan, Salamanca and Madero. The new refinery planned for Mexico lity includes hydrode3u1- furization processes for distillate products. The present facilities in operation at the above-mentioned refineries can nrocnce an 0.05% sulfure diesel in limited quantities. According to Pemex the cost of desulfuriza- tion is on the order of twio centavos per liter for the lomT sri-AfD- fraction produced. This premium fuel can be blended with high sulfur material to give a product with acceptable sulfur specifications* Ir. order to avoid excessive cylinder wear and other corrosion problems, consumers with heavy mobile equipment such as the railwavs shoild blrn a diesel fuel with a sulfur content of between 0.5 and 1.0/. Railway diesel fuels now prodaced by Pemex can meet these requirements. 1.13 The reduction of the sulfur content of fuels in general is also important for the community in terms of air pollution. In particular, Mexico City is conscious of the problemt of anir pollution, not all of which is caused by sulfur dioxide emissions from the burning of fuels. In the US, Japan, Sweden, and other countries, clean aix legislationI has placed severe limits on the sulfur content of industrial fuels. The permissible sulfur levels along the US East Coast, for example, -r y from 0.37 to 1.00%. In Mexico City, no legislation has been introduced as yet, but a commission is studying the causes of contamination, its measu r- ment and regulation. The enactment of regulations to limit the sulfur content of fuels and reduce the lead content of gasolines would have In- vestment implications for Pemex and price repercussions for the consumer of these products. - 6 - II. PETROLEUM TRANSPORT FACILITIES AND COSTS A. Pipelines 2.01 The location of both production and of the four major refineries has determined to a great extent the nresent pattern of transportation and distribution. With the exception of crude shipments by tanker out of Mina- titlan to Madero, all nide moves to the refineries by npneline. Natural gas is transported exclusively by pipelines from the major producing fields which are the originating ponnts for the nort.hern and southern gas systems. These two gas systems are not yet interconnected. 2.02 Refined products move from the four refineries by pipeline, tanker, tank truck and ra-f tank ca. to +he 60 or so sn' -s agencis '+'r n the country, either directly or via transshipment points such as the ports on th_- lW-est coast or pipeline ter.min ls. Tyicl' ports for the tr-aisshipment of oil products are Salina Cruz for outward cargoes and tIazatlari, Guaymas and Rosarto 'or c------ .LLOnsar-U _ IICIU CL,V:O 2.03 The basic traħsport problems facing Pemex are twhose of distan-ce and widely scattered points of consumption. The producing zones in Mexico are distant from the area of greatest demand for final products. This feature together with the geographical distribution of economic activity has given rlse to the existing network of pipelines in the country., Given volumie - at least five to ten thousand barrels daily according to the terrain - a pipe- lirie outperforms all other modes of inland transport in the bulk movement of liquid products. In liexico, pipe;ines are being employed to transport, in addition to the typical petroleum products, such specialized products as liquid ammonia, ethylene and propan.?7 At the end of 1969, there were over 9,200 kiliometers of trunk pipelines=. of all types in service in Mexico. 2.04 Refined products pipelines: By the end of 196", a total of 2,946 kilometersi/ of products lines were in operation excluding the Kinatitlan- Salina Cruz liquid ammonia pipelire (Table 3). Total capacity was rated at 151,500 b/d of which 88% was being utilized. Some lines such as the Salamanca- Guadalajara pipeline and the line to Salina Cruz have been running at 100% capacity. Consequently, as a result of bottlenecks, new traffic has been shifting to other modes of transport in recent months. The areas of demand which are facina supply problems comprise Mexico City and the Pacific Coast. The existing facilities comprise 6 to 12-inch diameter pipe as shown in the following table: '-15,937 kilometers if all loops, parallel lmines and lateral lines are in- cluded as of December 31, 1966. -/Excludes lateral lines or feeder lines. IMajor Products Pipelines in. Mexico l-ameter Lenghn CpaC& "J (inches) (kilometers) (barrels daily) Madero-Chihuahua 12, 10, 8 1,276 36,000 Minatitlan-Mexico 12 578 55,000 Minatitlan-Salina Cruz 10 2h5 40,000 Salamanca-Guadalajara 6 315 10,0100 2.05 Products lines in Mexico carry gasoline, kerosene and diesel with gasoline representing about 50% of the total volume. Products are sent in batches, with very little mixing. Residual fuel oil, because of its viscosity cannot be transported by pipeline except under certain conditions and can be considered normally as "captive" to the railroads. In technical terms, the transmission of heavy fuel oil by pipeline is feasible if the pipeline is heated or the product is diluted with a lighter hydrocarbon. Pemex plans to reduce the vicosity of fuel oil by adding kerosene for the proposed pipeline project between Minatitlan and Salina Cruz. 2.06 Crude Petroleum Pipelines: The principal crude trunk pipelines move oil from the central gathering facilities in the fields to the refineries (Table h). The two major inland refineries, Atzeapotzalco and Salamar.ca a.e supplied by crude lines from Poza Rica which is also connected to the Madero refinery. The total length of the major crude piDelines network aggregates 2,448 kilometers including loops and parallel lines1/. It has a capacity of c7:_non h/rl hii. thp navrag hA1iiaA ei.iqtanrn i.< nnlvr annroximatpIv 1'0 kilo- meters. The principal crude lines to refineries are: Major Crude Pipelines Diameter Length Capacity (inches) (kilometers) (barrels daily) Poza-Rica-Atzcapotzalco 18 245 105,000 Poza Kc a-Salnm.anca 12 455 5°.°° Poza Rica-Salamanca 18 ,14 453 100-50,000 La Ver.taM4inatitln 12, 12, 18 61, 49, 49 50-100,000 Naranjos--Madero 16, 20 120 60-1CO,000 2.07 Natural Gas Pipelines: There are no economical alternatives to pipelines for inland transportation of natural gas. Very little difierence exists between the transmission of gas by pipeline and that of oil. Irvest- ments and operating costs for compressor stations and the same diameter pipe l/Tf lines from the fields; with a diamster greater than six inches are included, the total length would be 5,660 kilometers. are similar to liquid lines. The speed at which gas moves along a line is superior but because oW te greater volume occupied by gas on a calorY basis more oil can be moved through a similar line. Unlike liquid products, gas must be delivered to the fi.nal constnuer by pipe. This i,mplies sp-i-tt-n the trunk line into feeder and spur lines with consequent sharp increases in operati-ng CostS as te. voLlur'-me drops. 2.08 The nat-ral gas line network in MeJ-co comprises two separate systems: The Reynosa-Chihuahua line in the north and the Cd. Pemex-Mexico- City-Guadalajara line in the south (Table 5). The total length of the net- work amounts to over 3,825 kilometers with an operating capacity of over 1.' billion cubic feet per day. The characteristics of the tyo systems are: Diameter Length Caacity input 1Q6c (inches) (kilometers) (million cubic feet) Reynosa-Chihuahua 24,22, 16, 12 987 320 304 Cd. Pemex-Nexico City-Guadalajara 24, 14 1,283 615 524 2.09 The northern transmission system runs from Reynosa to Nonterrey, Chavex and Chihuahua, a total distance of 987 kilometers, and has the follow- ing principal spur lines: Escobedo-Monclava (Altos Hornos); IMionterrey- Hildalgo (Cement); Chavez-Torreon-Gomex Palacio and Escalon-Laguna del Rey. Gas is also exported from Reynosa via pipeline to the US. The export con- tract with Texas Eastern expires in 1978 and as of now no decision has been taken concerning its renewal. The major inputs for the southern system are from the absorption plants at Cd. Pemex and La Venta. The line which runs to Miexico City (Venta de Caspio), Salamanca and Guadala.iara has a number of important outlets including Villahermosa, Minatitlan, Verzcruz and Queretero. Both systems are now operating at over 80% capacity. In view of the growing demand for natural gas, the construction of a parallel line to MQexico City has commenced and is scheduled for completion by 1972. In addition, the northern system is being strengthened in capacity by the addition of new compressor stations. 2.10 The total volume of gas moved b1y nineline has been rising at an annual average rate of 9.6% reflecting the growth of energy demand and the substitution of residual fuel oil in the areas served by natural gas lines, The impact of gas on other modes of transport has been indirect; it has slowed the Prowt1h of fuiel oil and shifted demand to regions not supplied by gas. 2=11 Pineline Costs: Pipelines represent a specialized means of transport which is both secure and dependable. They operate continuously and do not require the retu-- of empties. Pipelines can sh-orten dlstance between two points by cutting across terrain not accessible to roads or railways. Given m;XTI2l2. VVl_ con J-144J Uo, they are inore econonidcal 'or -iar'an transport than other modes of transport and in Mexico can compete with cabotage opera- tions. Pipelines are characterized by high Junitial investment costs, low operating costs and economies scale. Consequently, unit costs increase -9- rappirIlr as volye-%iYg I-rops Pipelj;nes nlshaveIn-r so^rmeAj diadvAC7-+gs +e,er - Cy are not as flexible as road or rail transportation and they reqaire minimum C+flWfltla Pn-Ul 4; +4e a- + +e-v , rln r. 4 p + s. 2.12 Pipe-L.l.e constucto n pratCII LL 1M-.gUMr costs "I MexicoL~' V&pc- + l in line with similar costs in other countries. Typical construction costs were made ava lable to UV U .Lssion W-sch take Ito accur.t iWI pi of locally manufactured pipe and Mlexican labor costs. Pemex uses its own con- struction, division for pipe-laying. The costs presented below do not incl.e terminals or pumps: Pipeline Construction Costs in MIexico (mthousand resos per kilometer) 10_ 12" 14" Pipe 168 203 218 Other materials 33 39 43 Labor 72 92 102 Total 273 334 363 US$/km (000) 21.8 26.7 29.0 2.13 Estimated operating costs were also made available for four diameter of pipe, under optimum and less than optimum volume conditions and two types of terrain: essentially flat ground and terrain with a gradient rising to 2,240 meters which is the altitude of Mexico City. The annual provision for depreciation is in all cases higher than all other operating costs combined, which is normal for pipelines of the diameters employed in Mexico. Table 6 shows total. unit costs as calculated by Pemex for new investment purposes on the basis of a 350-day operating year. For purposes of comparative Illus- tration only, the Mission has utilized the cost figure (including depreciation) of US cents of 0.1760 per ton kilometer as being representative of prodlucts lines operating under optimum operating conditions in Mexico. The ratio of railwav to pipeline costs is at least 5:1. Even an eight-inch line operating at 5%o, of capacity over rough terrain gives a 3.5:1 ratio. B. Tanker Fleet and Operating Costs 2.14 At the end of 1969, the Pemex tanker fleet aggregated a total of 350;o deadwTeight tnns and averaged 6.03 vearq in age (Tahle 7) TotaL tonnage owned by Pemex now represents over 50% of the ships under Mexican flag. The period 1965-69 saw nlmost the cnmplete renewal of +he fleet, with the purchase of 17 new tankers including specialized ships for ammonia, aro- matics -nn,A+ eth- ler.e Prior t +ea a-4c, sitions, t he + flee A h -ad be1e -e to deteriorate and become obsolescent: - 10 - Ch-laacteris tic s ofJ Pemeie-s Tanker-Fleet N\lmnhr nf Tnkfnr.c Average -A T1PT BarrP1, January 1, 1965 21 24.24 262,377 2,009,2t24 January 1, 1970 21 6.03 349,979 2,720,245 2.15 The renewal of the tanker fleet had several important effects. R.e- pairs- and mi-i-tenance Cost-s were reduce"d drastica- 'Ily I'rom Pesos7 ;lo r 1966 to Pesos 19 million in 1968. Moreover, the fleet commenced to earn -foreign exchiange on expor.ti freights., which amo unted tuo Plesos 25,, I '. LL.-Vlion" 1967 and Pesos 12 million last year. The utilization of Pemex tankers for SU i4lIlUiIjI1 U i UI U L1dħJi 04. U1;I1jJUħUy Ud.JO.L._luy.y exportu siLpm,ents representLs th1-1e u tilzat io of In,p xcs aaiy 2 .16.) The totali carrying capacity Oi Lune uauiker ħLee u vicreased ħroIU 4i million barrels in 1965 to 110 million barrels per year by the end of 1969. Acccuntiug for. this increase was the rise in tonnage, higher speeds, faster turnaround times and reduced repair time. Loading, urloading and demurrage has been shortened from 23c/ to 18% of totai time in operation and time for inspection and repairs to.17 days per year. Cnce new inspection and main- tenance metnods are introduced the stoppage for repairs will furtner be re- duced to an average of 10 days per year and thereby increase carrying capacity. 2.17 Port conditions do not allow the use of tankers over 20,000 dwt and indeed place a severe limitati-on on the full utilization of the carrying capacity of the present tanker fleet. Because of draft limitations, Pemex's fleet could only move a maximum of 83 ri-llion barrels per year if require3i instead of 110 million barrels. In effect, because of draft limitations, tankers loading at Gulf ports carnnot carry more than 110 to 120,000 barrels as compared to their maximum capacity of approximately 150,000 barrels. Tankers cannot operate with full cargoos out of Nanchital (27 feet), Vera- cruz (28 feet), Minatitlan (22 feet), Lerma (12 feet) and Acapulco (29 feet). This means that on the Gulf Coast 20,000 ton tankers operate at 75 to 80% of their maximum loads. 2.18 On the Pacific Coast there are limitationsoof a different type on the optimum use of the fleet. The limiting factor is not port facilities but storage capacity available at the different loading and unloading points. Tanker runs would be optimized and operating costs reduced if products tank- ers could discharge their full load at a single port instead of calling at a number of ports. Only Guavmas and Rosarito on the Pacific can accommcdate fully loaded tankers. Other ports, in particular Mazatlan, in terms of their areas of influence. could take full cargo shinments if storage was made avail- able. Another restraint on the optimization of fleet movements can be attri- buted to the lack of facilities for night operations at. some norts on hoth the Gulf and Pacific Coasts. - 11 - 2. 1 Q On the Gmlf Gnnm+t of wIexaico, +.he ave-rage riqt-nnna of ta,nker roulp.Te for crude and residual fuel oil is approximately 495 kilometers. The rission …a - -i .fo'm.ed + Pemex - -n -yer -_l 6 -0 , to 6 r t ear. n the Pacific Coast the average voyage for a distallates andblack products tankers O OtL Gh A -J-Cferer _ A .44_4A - A 4- _-_ _A -P'IA 4--A -;-s_ -44 _1- 4~;- 1- , .LJv > ~J.M~V LLWUO UBL iLA .LO v11 W . ..lSI I.L UX UDAIJ7h VF %.L -V- CL costs. In sharp contract to pipelines, tanker costs drop significantly as distance a,creases, as te,-.al e+enses cund demurrage are averaged ove.r a greater ntumber of ton miles. Unit cost of voyages between ports on the east coast are higher tthaun on the west coast of Mexico. The unit operating cost of the voyage between Salina Cruz and Rosarito has been calculated by Iemex at 0.072 US cents per ton-km. A typical cost estimat,ed for an ocean-goIag tanker of 20,000 dwt is 0.0372 US cents, per ton-kml/* The following 1royage costs were supplied to the mission by Pemex and are meant to be representative costs for full cargo lot shipments between the ports indicated. A tanlcer which partially offloads at several ports, as is stillthe practice for many shipments in Mexico will suffer rapidly rising unit costs. Tanker Transport Costs Under Optimum Conditions Distance Centavos US Cents (km) (per ton kilometer) Nanchital-Madero sj. 1.621 0.130 Salina Grim- Acapulco 475 1.523 0.122 Salina Cruz- Rosarito 2,737 0.896 0.072 Tnmnvi re-M.n t . n n e Rtn T~pico-Hi atln 5,68 1.200. ,rl- '-- IvV UZIU U.UcOZ 2.21 Actual average operating costs are somewhat higher because of port and storage deficiencies, undue delays and scheduling difficulties as well a.s excess capacity. In 1969, the fleet operated at 65% of total carrying capscity. The figures for actual operating costs discussed with Pemex cover a range frcm Pesos 0.0035 to 0.0056 per barrel-km. The mission has used the former figure equivalent to USO.225 cents per ton-km as representative of average costs utCoc'r present operating conditions. -/Mi^ha H Yubbard "The Com.parative Cost of l0 Transport to And within Europe". - 12 - r'.* a rA G~ VaCI 4- - - LL -4 H~ f U.LLAg Cos" U R.P1and RoaA iliviies c-;d Oper-ati,g4 Costs 2 .22 Tn transportnig producs from- re-ineries to marlkets, Pmex makele use of both rail and road facilities. The transport function of Pemex does not enrd at sales agencies. in towns, it distributes in owned tank trucks 'o the points of final consumption such as service stations. For example, in Mexico City over 170 tank trucks, the majority with a i5,oOw liter capacity, are utilized. Outside cities the company moves products from its own sales agencies to points from wnich private distributors operate. 2.23 For intercity traffic, Pemex makes extensive use of the existing railway network and road system. Pemex moves about 29.2 million barrels (3.6 million tons) of products by road and 36.3 million barrels (4.9 million tons) by rail. During 1969, the company operated a total of 2,862 rail tank cars with an average capacity of about 9,700 gallons. It runs tank cars in the 8-10 and 12,000 gallon class. Of the total number of tank cars operated by the company, 42.4% are owned and the balance leased from Mexican ar.d US railroads. Penex had budgeted for 300 new tank cars per year to replace older equipment, but for a number of reasons the budget has not been execatci. A basic problem facing Pemex is whether to tie up its resources in railwas tank card or whether to lease them. Once it has bought new tank cars, FeraeM. has limited its flexibility in the use of alternative transport modes. The national interest and prudent business strategy requires that some tank cars be owned in Yexico. In other words, the issue is not all leasing or all ow,nership. The railways, however, are understandably reluietant to invest heavily in tank cars without any guarantee of traffic from Pemex. The rmission cannot recommend a unique solution to this problem. It can only arrive out of discussions between the railways and Pemex as to what traffic guarartees and for what period can be given by Pemex and the assurances of service --.nd contractual freight rates than can be given by the railways. The mission would recommend, however, that as some of the older tank cars now oTxne I) Mexico reach retirement age, they should be replaced by 20,000 eallon cars which would offer unit savings to both the railways and Pemex. 2.24 As can be observed from the statistical data made available, ?ee has alreadv started to increase the proportion of leased i;o owned, cars- . n practice, tank cars car be obtained from specialized leasing companiea, a rihmber of whirch operate in MeXico. Tt is usu1al to lease rolling - for a ten-year period, although the time span may vary from company to company aording to the circumstances: Railway Tank Cars Operated b7 Pemex Year Owned Leased Total % Owmed 1966 1,264 1,495 2,759 45.8 1967 1,238 L,486 2,724 45.4 1968 1,224 1,550 2,774 44.k 1969 1,213 1,649 2,862 42.4 - 13 - 2.25 Railway transnortation is used by Pemex for LPT an-d heavy fuel oil and to a lesser extent for distillate products. Tank trucks, however, carry the greater rpart of distillate triaffi not moved by pipelines And tn-kers. Pemex does not own any intercity tank trucks, but enters into contractual arrayngemeintsn r.i+.h p%Ariv.atetee 2=26 An annalysis of o;Il products tr fic by ra; ' nd road Mexico suggests that the road fleet is more efficient, that is, it has greater flexibility, higher speed aund m.ore c-acity per -t per -- A - -;'wa tank car wij.] make a journey every 6.6 days averaging 135 kilometers daily, w;L'le a roaA frlk 4trauck covers arn est-1mated 429n k'drevr per day.-- -- 3 n- " J ' 1A ~aIn. Lu~Z U~ d.J.i -.L11UUd. U L4C7' &-..LLt;UM t1.Ft f)U.i UCLY* .UI terms of cubic meters originating, a tank truck will carry 3.4 times as nr1ich as the rail unit, but based on ton-kilometers the advantage shrinks to 1.7 times. Average hauling distances for the transport of refined petroleum pro-ucus were estimated at 414 kilometers for the railways and 290 kilometprs for road traffic. Comparative Operating Statistics Tank Car Tank Truck Average haul. (kms) 445 290 Average journey (days) 6.6 1.35 Kilometers/day 135 429 Journeys/year 55 271 Cubic meters/year 2,019 6,786 Ton-km/year 887 1,535 2.27 The operational data reflect the many problems adversely affecil'ng the proper scheduling of oil traffic by rail. The railways experience, among other, serious seasonal problems, in some areas, when they must givec priority to agricultural goods. In addition there is a lack of adeauate rolling stock. Moreover, at many points, either demand or storage is inade- quate to sustain efficient railway operations. Under these conditions, 1;jje choice of placing more emphasis on road traffic for those products which are not captive to the railroads appears to be reasonable as a short term so:tn in terms of real costs to Pemex vis-a-vis disbursements for railway serv:Lces. 2.28 The mission did not attempt to estimate the economic costs of road and rail transport of oil products. It did obtain. however, data on the co3t of these trzmsport services to Pemex. The figures Belected for the railways, based on current tariffs includinz an element of taxation averaged US celts 1.126 per ton-kilometer, but varied between Us4o.64 for long haul movements of residual fuel oil to US˘1.36 for shorter hauls of distillate prnoduicts. Road tariff schedules are arrived at by a process of bargaining and do not correspond to the fixed tariff levels set of'finially. PemeY informPed the mission that the average unit per ton kilometer cost for the movement of distillate products by road excluding TPG was approxYimatnly 1.4r87 US cents. - 14 - III. TRAFFIC TRENDS AMD PROBLEMS A. Domestic Consumption of Refined Products 3.01 The domestic demand for refined products has grown at an average annual rate of 4.7% in the past decade and by 6.7% from 1964 to 1968. Over- all energy consumption including natural gas has been growing at the higher ratesof 7.6 to 7.9%. During the entire period under review, there has been a marked shift away from fuel oil in favor of the lighter products. Residual fuel oil represented 34% of domestic demand in 1959, but by 1968 it had de- creased to 21%. This trend reflects the introduction of natural gas which has displaced residual fuel oil as the prime fuel for industrial purposes and coincides with the policy of upgrading refinery yields (Tables 8 and 9): Distribution of Demand b Maijor Products (in percentages) I 90 19) _ C)68_ LPG 7.0 11.3 12.5 DistilIlates 51.3 57.9 .58.1 NIel Oil 31.2 22=9 21 Others 7.5 8.2 8.2 Total 100.0 100.0 100.0 3.02 The absence of growth of fuel oil consumption and the continued strong demand for A stilla+ves has affrel +ed te r-s modAes of +tnsprort+. of oil products. In fact, the slow rate of increase in the rail movement of oil - only 1.3% ann.ually in the past V decade = -a b t ud measure to the shift of distillate products to the highw-ays, to the changing suucur of U'l0VLuhe do.mesi er.ergy m,arz.et ndIU, A& patcU '_Lar, Vo theU + .ucua= tions in the domestic demand for fuel oil. The rail tank car is the pre- UuIuħuL u no UV U.S. UiL-I%4iJAWL- ħUL' Ai.Lb JJ1UUUkU *~ 3.03 In the past few years, total energy demand has been growing at a somewhat higher rate than the Gross National Product (GNP). Rates of grouth in the G14r - and in industrial production - are often accompanied by sharper upturns in the consumption of energy. In Mexico GNP increased by 6.8% year'-l in the past five years and energy demand by 7.yZ. It is estimated that GiNP will grow at 6.0% yearly during the period 1970-75. In view of this the mission believes that future demand will increase at a somewhat higher rate, perhaps 6.7% with liquid products growing slower and natural gas faster. 3.04 Much of the outlook depends on distillate products and LPG. The distillates market responds to the demand for fuel to be consumed by all forms of transport. The requirements of the transport sector averaged 220,000 b/d in 1969, or the equivalent of an average growth rate of 9% p.a. since 1965. In geographic terms, distillate demand on the Pacific may increase to 78,000 b/d by 1976, far in excess of the present pipeline capacity to the - 15 - M-U st C.joast. ."XJAL co iJ.Ly L l-Uħt.eLItIjU,t d.L-e i.LJLdJ.CUUU ħJ.'.JpJt 16,VJ U/U by 1971U., which could not by supplied with existing refinery or pipeline facilities. Distillate Domestic Demand by Region-/ (barrels daily) Averae Growth Rates 1965 1Y69 1976' 1965-69 1969-76 Pacific Northwest 28,080 36,112 55,847 6.5 6.4 Pacific Southwiest 8,264 11,844 21,726 9.4 9.1 Sub-total 36,344 47,956 77,573 7.2 7.1 Mexico City 55,108 71,381 115,745 6.7 7.2 Other 92,414 128,661 233,151 8.6 8.9 Total 183,866 247,998 426,469 7.8 8.1 B. Traffic Flows by Mode 3.05 1Piplires: Tn 1969; a total volulne nof 133j400 b/ai (6.04 million tons) was carried by the products pipeline system as compared with 91,6C0 bh/i (4.15C millitn trr.c) in 1Q96 (Tahbl 10). Thusz in +he 19Q65.-6A -pei total pipeline traffic increased by over 41,000 b/d representing an average Annual rate of 10.1<. Pipeline traffic gre7wm faster thnn the output of gasoline, kerosene and diesel fuel from the refineries. Of the total volume of the-se products leav -ing refi-ld- 548, A 7 w1 movreA b-y ,iptin +nnt first stage of distribution during 1969 as compared with 46.7% five years pviously. Nat 1 ' gas- .,onern.ent b 1- l l -ne- 0 b C pa. n the 1965-69 period (Table 11). 3.06 Traffic flowrs by pipeline can be easily identified; the principal noveiient-s are sh.lomtħ as folloWs; Prodc1ucts IPip-line Tra-fJi'4c (thousand barrels/daily) 1965 1969 Madero-Chihuahua 23.6 32.4 .1 In~~~~~f., M4inatitlan-Mexico 1.9.2 47.i 1 Minatitlan-Salina Cruz 35.5 33.4 Others 13.3 18.5 Total 91.6 133.4 _/Gasoline, kerosene, diesel (excludes LPG and ,jet fuel). 2/Femex estimate. - 16 - ripelines affect all other modes of transport. During 1969, most products lines were operated, as has already been stated, at between 90 and 100% of capacity. it can be affirmed that the products line system is becoming tne source of bottlenecks because of the absence of spare capacity and delays in the construction of new lines. These lags in pipeline capacity are now showing up as sharper than average increases in other modes, notably road and rail. Petroleum traffic on the highways and railways reflected this situation in 1969. The railways alone registered an increase of 7% in oil. novements over 1968. The investment strategy, as developed by Pemex, to cope with rising energy requirements and changing geographical patterns, envisages that pipeline traffic should increase by over 12% annually to average 296,000 b/d by 1976. 3.07 Tankers: Excluding specialized petrochemical prcducts, 9.2 million tons of crude and petroleum products were loaded on Pemex tankers, mostly for cabotage, during 1969 (Tables 12 and 13). In the last two or three years. Pernex has on occasion utilized its tankers to carry fuel oil to the US Eas- Coast to reduce idle tanker capacity. Tknker traffic has been rising at 4.5. Traffic comprises crude petroleum and residual fuel oil movements between refineries and movements of distillate products and fuel oil to consuming points: Tanker Traffic (thousand metric tons) 1965 1967 1969 Gulf Coast 5,691 5,768 6,789 Distillates 1,053 695 957 Hea Prodnuts 4,638 5,073 5,832 Pacific~ Coas 2,03 2, 0178 ~ 2,4V P* - . fl .-,'-,.J.-I)? Dist;' l at1 4es I 1, Ef4 1 ,600 1 P71 Heavy Products 577 578 5LO Total 7,724 7,946 9,200 3.08 The principal traffic flows are, on the Gulf Coast, from iinatitln- Nanchitial to Tainpico-LUxpan for black products and from the two coastai re- fineries to several ports, including Veracruz to Lerma for refined products. On the Pacific Coast traTfic originates out of Salina Cruz to tne principal oil ports, notably Mazatlan, Guaymas and Rosarito. Present refined produ1ct requirements on the racific uoast exceed the capacity of tne Isthmus pipd!lIn and railway. Pemex estimates that during 1970 it will need to transport 48,000 b/d of distillates and 12,000 b/d of fuel oil to the Pacific. Ibe l'linatitlan-Salina Cruz pipeline has a maximum capacity of 40,000 b/d ard the - 17 - ra iway, as operated today, cannot carrj more than 8,000 b-/d rof fu1el oil according to Pemex authorities. The mission was informed that two to three tankers a UII UIt are UL-e iLg UdLspat chied from Tampico to P Paific Gos-t V the Panama Canal to cover the deficit of refined products. These tankers (distillates and fuel oii) usually uischarge at aIatlar and G-aymias. 3.09 The future rate of growth of maraitimie traffic depends on a number of factors, among them (a) completion of a products pipeline from Salamanca via Guadalajara to a point on the Pacific, probably iMazatlan, (b) addi- tional line across the Isthmus of Tehuantepec, (c) a system of products lines in the Pacific Northwest either by extending the proposed line to iviazatlaul to Culiacan and Los Iiochis or by constructing a number of small pipelines from Guaymas, Topolobampo and Rosarito, (d) possibility of a new oilfield on tae Pacific, te) increased production from the offshore fields opposite Poza Rica. The demand for transport services in the Gulf will increase on account of the projected supply of refined products into Tuxpan for Mexico City, bilt exports to Brownsville and other US points may diminish. In the judgment o- the mission, an estimate of 105 million barrels seems more realistic than the Pemex projection of 115 million barrels as the volume of cabotage trade by 1976. 3.10 Railways: The traffic of bulk petroleum products on the railways has not varied significantly with the exception of 1969 as the following table illustrates: (millions metric tons) 1969 4.29 1964 4.28 1968 L .59 1969 4.91 3.11 The principal causes of the absence of strong growth in freight ti-affic were, as has alreadv been mentioned, the slow demand for fuel oil, the competition from the highways for distillate products and the uneven service prolVried by the railw2ys. PiI oil traffiG; in faet, deelinnd between 1959 and 1965, but expanded slightly after that date, while dis- tillate prodv1ucts have increased sliahtltr The mn-ovement of fuel oil by rail reflects the rate of consumption of the product. Demand for fuel oil decre.sed fll,-v,rg tbe. 4 cor-.pletion of the Sou+hern National fa S em. biut sin 9166 tui. - -- s a..JA.. .1. . -. it has again shown an upward trend. 3.12 The principal flows of traffic originate at the four major refineries, from the pipeline termi.nas in the Nort+ and from ports on +he Gulf Coast. Thc traffic moving from ports of unloading on the Pacific Coast is mostly by roadA. Over 2>p vwof Of 11. rai.l trafffic orig-in-ates . S-Almna Broadl y speakLng, fuel oil moves north from Tampico, north -nd west from Salamanca and west. to Seina Cruz fro, iYlinatitClan. The points of origin of diesel and gasolihne iroight are far more widespread, generally pipeline terminals. - 18 - 3.13 The mission believes th.at tot 1 rail tr "fic of ner =-nm productsX including fuel oil and LPG, will increase but at a slower rate than demand, bear'4ng, mind t-he peroposed -ipli 4r- -r'grannn o-w Ir, w;1 be + -r rt+nA 'by the railways wiill depernd in part on the rates and the type of service the residual fuel oil are limited but no such problem exists with respect to gasoline, 'kerosene or (A:esel. LThe quet;:onJVl thatt r.eeds'A CUI0wUI--Lg Ls whatC measures can the railways take to offset competition from the highways. The railways aid Pemex should explore jointly ways to improve service, Aitilize black trains wherever possible and encourage the use of 20,000 gallon tank cars. Pemex could indicate its railway transport needs more accurately to the railways. 3.14 Road: The increase in the volume of distillate products moving by road has been remarkable. Traffic was up by 14.6% per year in the period 1966-69 to reach 3.6 million tons. Traffic flows are less identifiable. However, approximately 4h/o of road traffic originates at refineries and the balance at pipeline terminals and import points on the Pacific coast. The outlook for the future is for continued strong growth with rates of increase below the recent historical trend in the light of the projected pipeline construction program. C. Intermodal Distribution 3.16 From 1966 to 1969, the distribution of oil products traffic (ex- cluding crude petroleum for all modes except tankers) evolved as follows: Tankers Pipeline Railways Roads (thousands of tons originating 1966 7,813 4,523 4,405 2,409 1969 9,200 6,038 4,911 3,620 (all modes per cent) 1966 40.8 23.6 23.0 12.6 1969 38.7 25.L 20.? 1_.2 (innri r pevr nt) 1969 _ 41 4 33.7 24.9 3 1 7 Tn A ' rn-A +r -r.n+nvi the trend hs b a way n fYs r. the 6- .rnil--ws Rail rates are approximately 25% below the tariffs Pemex must pay for inter- AI JCLL LrLoUd ha 'age oJWeVV, UeZ; LtoAIM; th AiVegenrL.Ly pooJJr q4u .L..LLyy V.f t4e raiL.L- way services, the greater efficiency and flexibility of road transport and e ħlWt:K 4.LUVO ULIICIIU, .4 in L storag fa L 'Ltes needUe to h-IU.Le roaCU LtrIff.Lħ1c, - 19 - ^r.nn!- tc -s+ld allowed .^4f +^+DI tr'f9,. Tn, fha li + htf c:+.runjil increasing distillate consumption, the performance of the products pipeline sector, wS h ch . cre-sed i+ share o. tr ..i *aO C.LSi b SiAr ing. Pipeline costs are highly competitive, the average cost figure used. by +1,- -4~~ r% '7K TTQ --4-- 4-.,14 4,.... 4+1 ,. -In~ the .,sso o .16USctspr +^n k'.erisabout o-e=4-f+> cf- +wh railway tariff rate. Taking this factor into consideration, it appears reasonabLL).Le toV L ULt .cL. UU U,t theL jJLJ. ofLV V i ir. traffic was 1hin dered by the existing capacities of the lines themselves and by lags in new invest- Flerlt. Totad pipeline capac,ity inCreases ui discontinuous steps as pup-ing stations are added or new pipes are laid down. 3.18 The decrease of the share of the railways and marine division in the traffic pattern suggests that Pemex's unit average costs per ton kilo- meter are irncreasing. With the rather incomplete statistical informatioir available to the mission only a partial review was possible. It was assumed uhat ton kilometer costs did not vary from year to year and that the haulage distance reralned the same: Haulage Distance Average Cost to Pemex Im) 7US˘ per ton- m) Tankers 800 0.225 Pipelines 500 0.176 Tank Cars 440 1.126 Tank trucks 290 1.487 3.19 On this basis, total ton kilometer costs for moving oil products in Mexico were US cents 0.450 in 1966 and US cents 0.475 in 1969 but if tanker transport is separated out, the inland figures are 0.738 and 0.749. In the light of the above, if Pemex is to hold down its average costs for refined products traffic, the expansion of the pipeline system, volume ccnQi- tions permitting, appears desirable in order to reverse the trend of the present modca split. - 20 - 1V. _ _EST_A_T AND __WOR PRuw-CTS A. Past Investment 4.01 Petroleum transport sector investment in Mexico during the past five years amounted to Pesos 3.1 billion or approximately 15% of total Pemex investments in all activities, including new wells. Transport in- vestments in the 1965-69 period were distributed as follows: pipelines 39.3%, tankers 25.1%, storage and distribution facilities including ports 33.60 and road tank trucks 2.2%. 4.02 During the period three quarters of the tanker fleet was replaced with ensuing benefits to Pemex of lower operating costs and the elimination of inward charters. The heaviest investments in pipelines were directed toward the completion of the southern gasoline system as far as Guadalajara and increases in capacity through the addition of compressor stations and spur lines to the northern system allowing for an annual average increase in pipeline volumes of 9.6%. Investments in crude pipelines reflected the distribution of production and the increased capacity of refineries. In the same period, remarkably few products lines were completed reflecting the spare capacity existing at the begin- ning of the planning perio. The heavy emphasis on storage and distribu- tion plants has also had cost-saving effects. The added storage has enabled Pemex to make better use of its owned transport facilities - pipelines and tanlcers - improve its distribution system and avoid temporary local shortages. The 1965-69 investments are summarized below (also sec Table 14): Transport Sector Investment, 1965-69 (Pesos million) Total Annual Average Pipelines Crude 254 50.8 Gas 799 159e8 Products 157 31.8 Sub-total 1,211 242.2 Tankers 772 154.4 Storage & Distribution 1;035 207.0 Tank Cars 62 12.4 Total 3,080 616.0 - 21 - 2,. Fute I,VVeswUVL.U 4-3 During itS next planning period, i97l-7, e t-o almost double capital investments in pipelines to reach Pesos 2.17 mil- .Uon. It is faced with the growing problem of s-upplying refined proucts to the 1Mexico City area and the Pacific Coast to meet anticipated demand. Pemex now recognizes that some products pipeline projects harve been nduly delayed because of the investment priorities assigned to other activities such as petrochemicals. Less attention, however, seems to have been attached, in the allocation of available funds between the several modes of transport, for example, to pipeline projects in the northwest wrich would help to minimize transportation costs to the region. The following is the proposed investment program for 19 r-75 (also see Table L!): Transport Sector Pronosed Investment, 1971-75 Total Annual Average Pipelines 2,169 433.8 Tankers 846 169.2 Storage & Distribution 343 72.6 Ports 125 25.0 Tank Trucks 64 12.8 Total 3,557 711.4 4.04 Part of the pipeline investment, not considered in detail in this report is directed to crude and natural gas pipelines. A crude pipeline system is continuously undergoing change as new producing fieldls are connected and old fields exhausted. The location of new fields always constitutes an element of uncertainty. Planning can only be as good as the knowledge of new production facilities. Over the 1971-76 planning period, the principal investments in crude pipelines will be concerned with increasing the capacity of supply to La Venta, Minatitlan and Pajeritas in the south, and in the mid-east to the Mexico City refineries and to Madero and Salamanca. Natural gas pipelines are in a somewhat d-f- ferent situation; they connect the producing field to the final consumer. As such thoy are subject to the uncertainties and risks of future locat:ion of production on the one hand and on the other to the growth of the mar]set. The program under consideration will produce significant increases in capacity of both the northern and southern natural gas systems. - 22 - 41.C5 The transport sector investments represent from 20 to 25% on the average of the total investment program of Peniex. Investments in Lhe transport sector, as in other petroleuom activities, are financed by the internal generation of funds, and by medium and long-term suppliers and bank credits. As an objective Pemex lays down that a substantial part of its investment program should be financed out of its own resources, approximately 7C0o. The present financial position of Pemex is reasonably sound although difficulties in the net cash flow may be expected in the next year or two owing to start uD problems and lags in industrial instal- lations. This is particularly attributable to the phasing in of sormie retrochemical plants which have not yet reached full nroduction. h.o6 Variables whieh affect the net crh flow available for investment are the object of revision and review. Costs for example have increased. In Darticular one can noint, to t.he csqt. nf nrn'odecinog l ow sullIfilr nrodlimt.ts. which reflects the capital investment in new processes, but which has not been offset byv higher prices. Nat+ral gas prices in some parts of the country are very much lower than production and transport costs. C. MaJor Products Pipelines 4.07 Three major products pipelines have been approvred for construc- tion or are imclder actix onsidration as fol owsc rpany - Poza -Ric - MMw,r.ro Cityr Salamanca - Guadalajara - Pacific Coast MwinatHi-1rn - Sa-. Cruz,. h.08 mTiutpAn-Poza RicA_texico Cit. h p products pipeline would relieve the supply problem in Mexico City by permitting the shipment of gasoline, ne n die from Adero and inatitlan u4 sea to Tuxpan and then by pipeline to Mexico City. The measure is admittedly a tempnorary or.e Aes-gr-eA 4to coe-ures localI cos,+in,uti s new 150,000 b/d refinery for Mexico City is placed on stream in late 1975~ or 1976. 14 W -Total distulLate demand within the zone oI influence of the Atzeapotzalco refinery has reached 90,000 b/d. The present situation is one -whereby the plpelile from Miinatitlan and the refinery at Atzcapotzalco are operating at capacity, but cannot meet demand. As a result of the .uLy -utmaħIU positiQn an aaaitional strain nas been placed on other moces of transport, particularly the railways and highways. For example, Puebla, -hich is wi.uin uhe zone of influence of Mexico City, instead of receiving its supplies from the pipeline or Atzcapotzalco, will now depend on lhf - X r1d.uerou. - 23 - Distillate Demand in M4exico City and Adjacent Areas 1965 1969 1976 Mexico City 55.l08 71,381 115,745 Others 12,130 16,632 27,570 Total 67,238 88,013 143,315 4.10 The pipeline has a high priority and represents a strategic investment for Pemex. GCornletion of 12 to 14 inches line with an ultimate capacity of 50,COO b/d is planned for 1971. Once the new refinery goes on sLream, the pipeline would be utilized for imnorted LFG (butane and propane). Under conditions of uncertainty, the solution to the Mexico City supply problem is suitable beccause of itS flexibility Tt combines two modes of transport and alternative sources of supply in both the refined products and crude petroleum case. 1.ll Salaman..a C-uadalaj.ara-Pacific Coas.- Pemex is giving high priority to a pipeline from Salamanca to Guadalajara and then to the Pacific via Tepic to a point probably ne-ar 1zatlan. TIe pipelin e can be justified both on economic criteria and because of security reasons. The ent-ire Pacific Coast of M1,exico is dependen + n t4he% t-ans-istim.ic pinpeline and the Minititlan refinery for its supplies of light products. An alternatisvre route is felt to be desirable on se - cu i ty,r o-do too supple- ment supplies from Saulina Cruz and to reduce tanker delivery costs by ellminating Mazatlan as port of call for light products. Within this context, the decision represents a minimum cost approach for moving additional quantities of products to the Pac-ic coast. h4.12 Co-.suption -in GuadalajJara, already exceeds ex_t-ing pipeline capacity. The following demand figures have been projected for the area, one of thfie fas-test growing i,. thse countr-y: 19697 1i2, 3,32 lbarre'ls dail,y -1973 I 17, U .L.L A-/I J .L I ?7.Lc. 197g6 23,566 "! 4.13.,? uOtenslion. of.L DUe ħine to riLa'Lar of sorme otlC-er pojirnt onr.h e Pacific would provide a port for outward cargoes of refined products for Topolabamipo, la Paz and i'e smriadller ports. The Le inn, approximately 500 kilometer line is dependent on the e,xpansion of the Salamanca refinery, - 24 - (110.000 X/d) scheduled for comDletion in early 1972. During 1973 and beyond it could supply some 25,000 barrels daily to the Pacific Coast. The impact of the new pineline would be mainly on shipping. Mazatlan requires three to four full tankers per nonth. Once completed, the pipe- line would reduce vovages out of Salina r-uz and permit a more efficient scheduling of tanker operations along the Pacific Coast. 4.1 N4inatitlan-Salina Cruz. The Minatitlan-Salina Cruz corridor (25O km) is of particulanr Jnnnr+ance to +he movrement of 1ioht. hewuv and specialized products from the refinery center at Plinatitlan and petrochemi- cal plants +o the Pacii Got Te corridor isa ,'nmrmrnici+.Tnn lf - line as far as the oil industry is concerned. By means of different modes of transp-rt across the TI4-1-n +kn e M vlr rf'-ery on +the east coast extends its zone of influence along the entire west coast of Mexico. It is PDnm,n'ls -1g.st nn- r.ost or-,m-.I re .e'nv. 'Pnn-n.s.+'k-4 tranpor .J.J 4. ~I~'f -J tA - -LIUt *iMjov U "L1J.U~ .t4 S4~.. * 44 O.JA Th Vl"Ik4..L~ US -L.LQ4jFS IJ facilities are varied but inadequate in the light of present and future * -..&.J. A'ISLI&VUQ * 4.LJ YJ.JJWJ.L4 .U U .14& .J U U .LA4 - Lo LU1_LU.LLU Uk.) C6LJtJU.U L4'J,VJ'..." / jU but demand already exceeds capacity which can be pushed up only under cost4 cond U.Jitions. TLheL rLC1ħi.k.lway as Upra.Lc-I. Uu dues n.Luk cappear to be able to handle more than 8,000 b/d (1,080 tons/day). To assure the flow of oil products to the r-.st coast, Pemex -- its taner fleet. Approximately two tankers per month are being utilized for the 5,660 deficit moved by sea is on the order of 4,000 barrels daily of fuel oil and 8,0Wooo barrels dUaħ.ily O.r rLUf.LedUU prodUUct us. UlU ItU U,y rotUU be disadvan geo-us for Peme to m sLllquanti of products to the -tst coast b-i tanker while it has idle capacity in its fleet. Costus, as will be observed below, axe not subutantiLaly g-eater than by the railways. However, one of the major justifications for sending tankers via the Panrau Canal is reiated to tne dry dock facilities at Salina Cruz. Under present operating procedures tankers must go into dry dock for iunspection once a year, but the company nas already indicated that it is putting into effect new procedures whereby dry deck inspection Will ue required every other year. 4.16 Q Derand projections for the west coast indicate that fuel oil requirements, now at a level of 12,000 b/d will increase to 20,000 b/d Dar i 74. Distillate demand, which includes gasoline, kerosene and diesel but not jet fuel has been projected to increase at a rate of 7.1: consumption of these products will reach an estimated 64,000 barrels daily in 1973 and 77,000 barrels daily by 1976. The extent of the supply problem can be appreciated by assu-ning that pipeline and rail capacity to the west coast remained at the 1970 level. Under these theoretical conditions, a total of some 7,000 tons per day (approximately 52,000 b/d) of fuel oil and distillate products would have to be carried by Pemex tankers in 1976. It would involve the emnployment of 10 tankers per month from the east to the west coast. Alternative non-pipeline inland modes of transport would signify substantially higher average costs to Pemex. - 25 - -17 l:t is perftinent to eX_amine briefly the alternatie s in tc.nr?nq -P9 costs colifronting Pemex when planning its transport investments to the Pacific Coast. T'he rission has chosen thv.ee altlernative nm.ode ors, tion of modes from the point of embarkation, which is taken to be Minatit- lan to the port of-1 unl,oaJng, assurd to be Guaymas. The- 'tarnatve modes are pipeline and tanker, railway and tanker and tanker via the Panama CnalJOJ. TheI alternVti rou.L -es and- costs ca4 ' e d, which are r,.eant to be representative of optimum operating conditions, are applicable to distillates only r uel oil 's a specia'l case anu -will b re-iewdu belUo. Within this frame of reference, the mission has estimated the following approx-{.e unn it costs: M'fovement of vistillates from viinatitian to Guaymas: Cost per Ton AlUernative a: Pipeline and Tanker uS$ 1.56/ton Ailternative B: Railway and Tanker US$ 3.84/ton Alternative C: Tanker via Panama US$ 3.98/ton 4.18 The above includes the cost of transshipment and handling under alternatives A and B. Two salient facts stand out: tanker and the com- bination railway and tanker modes represent costs approximately 2.5 times above the pipeline solution and the Panama Canal route shows only very slightly higher average unit costs, but includes an outflow of foreign exchange to cover Panama Canal dues. The above example also illustrates that the railway combination (Alternative B) is preferable to the longex tanker haul in that it is competitive on a costs basis, shortens the distance of the haul, eliminates the return of empty capacity over long distances and reduces the time factor. 4.19 To solve the trans-isthmus transport situation over the medium term and barring any major discovery of oil on the west coast, Pemex proposes an imaginative alternative. It would switch the actual 10 inch line to fuel oil and construct a new 14 inch pipeline for refined produc;ts. Briefly the project comprises the blending of fuel oil with kerosene on a 65 to 35% basis which reduces the viscosity and permits its transmittail by pipeline. Separation would take place at the pipeline terminal by means of simple distillation but a small part of the kerosene fraction would remain to give a more acceptable fuel oil in terms of pour point. The project is in the nature of an innovation, since, to the best of the mission's knowledge, there are no trunk pipelines for fuel oil operating elsewhere. 4.20 The 10 inch pipeline would operate intially at a capacity of 20,000 b/d with a fuel oil yield of 15,000 b/d. The capital cost of the separation or distillation facility, essentially a topping unit, would be approximately Pesos 30 million. The mission did not review the economics of the project with Pemex officials. However, a preliminary 2 6 - estim,ate suggests t11aU LJALU UiL ' d ħ tranVor LZ) LLIL LUU.dLJn With sepLratio.LU Uof kerosene from the blend at Salina Cruz would be considerably lower than present rail-way chljaLgees to tae cUI y pL-uoabLLy onI thie UorUer- Uo US cenjts 50 to 80 per ton below current railway rates. 4.21 The above conclusions have been reached on the basis of the financial costs to Pemex of the transport services provided by the rail- ways. These financial costs are not to be confused with the true economic costs of moving additional quantities of fuel oil from Minatit2.an to Salina Cruz. Elsewhere, the mission has estimated the long run marginal cost of freight service by specific cornmodity. For fuel oil, the econo- mic cost to the railways on the Salina Cruz haul amounts to 6.36 cen- tavos per ton kilometer as compared with an average tariff of L0.54 centavos. For the 280 kilome-ter trip, the difference between the two cost concepts reaches Pesos 15.31 per ton. 4.22 Concurrently with the above plans, a new 14 inch distillates pipeline would be built parallel to the existing right of way with an initial capacity of 60,000 barrels daily. Pemex plans to have these facilities in operation by late 1976. Some comnments are in order. 4.23 The Guadalajara-Pacific pipeline will lessen pressure on the Minatitlan-Salina Cruz corridor for some years, but probably by 1975/77 availability of distillate out of the Salamanca refinery would not be sufficient to supplement west coast requirements. Irrespective of plans for a fuel oil line, the 14 inch distillates pipeline across the Isthmus would become necessary at this time. The critical short run problem then becomes that of making sufficient fuel oil available for west coast consumption without expanding the tanlcer fleet. This solution would involve the allocation of resources for significant investmeAts at an early date. 4.24 The mission believes that the railways and Pemex should make a concerted effort to increase the capacity of railway traffic in the corridor from 8,000 b/d to 12,000 b/d and eventually to 16,000 barrels daily equivalent to 2,160 tons/day, The measures that should be taken involve the leasing of 20,000 gallow tank cars on the part of Pemex and the organizaticn of block trains by the railways. Such an arrangement would not only give higher capacity, but also lower unit transport costs. Concurrently the problem of the rate structure taking into account the long run marginal costs should be studied by both managements. Additional storage and other terminal facilities would be required involv- ing both Pemex and the railways in some new investments. The mission was also informed that some suDDlementarv sunnlies of fuel oLl would also be available at the Salamanca refinery, once the expansion has been completed. These sunplies could bp moved by railway to Manzanillo where there already exists facilities for handling fuel oil. - 27 - J.25 rn, summn~rty the trar,s-isthrwi fuel~ oil pipeline prodct oul be feasible on the basis of present tariffs by 1972 or 1973, but can be \ost_--A{ "'+ le-+ +A _107A ...; |.+ ^ou+; ;;;+1..- +" - o^"+ 1 -V m V Ii U . V I U- , - Vii. W SJ Li a. 41 U. 4J, 13E, . vcl .LJ 13 U- c 4 t, U cost struc-ture of the company prov-ded railway traffic capacity is increased an -a -o'ution4- -C ork-edI out on the1- tar:f rate tobeaple to the additional tonnage moved. It should be pointed out that once the fuel oil line is in--c operation -theewl be a significant dip in railwa;y transport across the Isthmus followed by a gradual rise as pipeline capacity becomes insufficient. D. Port to zarket Pipeiine 4.26 In addition to the above, there are a number of- smaller pipe,iie projects, some of which in the judgment of the mission might also be carried out in Pemexis next planning period. The projects refer to pipelines, not tied to refineries but to shipping ports on the west coast, notably Rosarito, Guaymas and Topolobampo. They could represent a significant cost-saving for Pemex in view of the growing requirements for distillates in the area. In terms of costs by alternative modes of transport, they would have a payback period of 18 months to three years. For financial reasons, however, they were not included in Pemexis investment budget for the period 1971-75 made available to mission. 4.27 Among others, the following products pipelines are being considered by Pemex: Ports to Harkets Product Pipeline Projects Pipeline Diameter Length Capacity (barrels daily) Rosarito-Tijuana-Mexicali 8" 220 Guaymas-Hermosillo-Magdalena 10" 300 10,0CO Guaymas-Cd Ogregon-Navajoa- 10" 195 1O,000 Topolobampo-Los Mochis 10" 24 10,G00 Progreso-I,brida 8"1 3h 40i,000 Other pipelines of this nature have been considered such as one from Mazatlan to Culiacan and Los Mochis if it is decided to extend the Guadalajara line to Mazatlan instead of a point further south. h.28 The main point to be made is that distillate traffic through these ports is projected to show a strong upward trend. At present over 13.000 b/d of distillate are moving through the port of Guavmas. excluding jet fuel, and by 1976 this will have increased to over 20,000 b/d. Simn- larlv. the Rosarito-Mexicali area will consume around 20,000 b/d by 1976. _ 28 - The construction of +whe ehore pipelines wov"l Axn the zn o influenze of the ports, assure regular supplies and reduce transport costs. The mnisszion is not. in a aposition - -% to .-ca Ui as toL the Vd U'U lines, but strongly recorrimends that the -whole concept of port to market pro- 6kcts line be reviewed t.>4Jn U1- conHa4y in shdr ftL l orvwdr-I4.L1-- th UI k of the investments for these projects. Consideration should be given to the in.tegration of' som,e of these projects -with port projects, so that invesuaentrl could go forward in a coordinated fashion. E. lexico City - Airport Pipeline 4.29 The efficiency of supply of jet fuel to the l4exico City airport has been called into question. Jet fuel is handled at airports through an intermediary NACOA in iwhich the public sector holds more than 50?, of the shares. Pemex delivers more than 900,000 liters per day (5,660 b/d) of jet fuel by tank truck from the Atzeapotzalco refinery into the IT$ACOA tank farm at the airport. The price of jet fuel to the airlines was fixed recently at 47 centavos per liter (US˘14.23 per gallon) which is competitive with prices at the major U.S. airports for international aviation. INACOA pays 40 centavor per liter, the difference being attributed to a commission of 6 centavos arin a thrcughput charge of one centavo per liter. 4.30 Pemex freely acknowledges that a jet fuel pipeline would reduce distribution costs and indeed, has already selected the right of way. Among the factors delaying the pipeline decision is an element of uncertainty wsith respect to the future role of the airport. It is understood by the mission that a study is being undertaken on the feasibility of relocating the aiiport to a new site. 4.31 The decision, nevertheless, to undertake the laying down of such a pipeline in the short run, will depend on negotiations between Pemex and NACOA as to the financing of the project, The project would reduce distri- bution costs and release tank trucks to handle other products: the invest- ment decision merits prompt attention. Fe Tankers h432 During the past five years. emphasis has been placed on tankers within the transport sector of Pemex. The company has clearly defined its policy lwith respect to marine operations: this nolicv aims at the nurchase of new tankers rather than at charters on a long-term basis. The reasoring behind this decision is that time eharters tend to fluintuatep wndely rbring periods of crisis. For example, during the second Suez war of 1967 spot rates rose by m-ore than 150 pnints. As a general comment te mi ssion is of the opinion that for future incremental operations, the company should c-onsider c-hartering a small percentage of the tounage required on a long- term basis. The practice has been particularly attractiveto oil companies when freight rates are lowc 4.33 In the case of the tanker progr-m some of the recent investments may have been premature, although in many ways, the lumping of investments in...,.,~~V~-Q new; .L'Q dng 1965=69I was Ire u . LJJy ILt ;;h cVos - 29 - oC operating an obsolescent fleet cormprising tankers built in the 1930's ard earlier, The acquisition of newf tankers, on the other hand, has brought the company scma very evident benefits in lower operating costs, reduced repaii -aid maintenance expenses and foreign exchange earnings on export shipments. L. 34 The mission estimates that the present fleet could adequately c>oover needs througn to 1975 if the pipeline and port improvement programs go aheado The latter are not entirely under the control and direction of Pemex. Tentative plans have been put together for the purchase of six new 20,000D ton tankers over the period 1970-75 to replace an equivalent number of oLder ships. In iM3xico, 15 years is considered as the useful life of a tanker in domestic trade. Replacement of the older vessels would add about 5 million tons per year in effective carrying capacity. It is recommended that the replacement of old tankers could be stretched out and not accelerated as proposed in the investment program. The reasons for this is that demand is likely to rise more slowly; the pipelines projects will reduce some of t]Ae urgency; improvements in the scheduling and maintenance procedures of the fleet may prove easier than anticipated; and a dredging and port betterment program will take a shorter time to be executed than forecast. 4.35 Port facilities in particular are limiting factors for efficient tanker operations. Insufficient storage capacity is another factor. Pelnex uses fixed buoys at Tuxpan and Rosarito and has plans for a revolving buoy at Coatzacoalcos. It also tentatively plans to build permanent facilities Uo accommodate tankers up to 30,000 tons at Pajaritos. Tankers have comnenced loading at Paiaritos usinp provissional facilities. Once the new works are completed, Nanchital will be eliminated. Present operations at Nanchital are hazardous and inefficient. Tn addition. the company is interested in devjelop- ing the port of Topolobampo. Present conditions at this port preclude the ent.y of large vessels because of draft 1imitations, With dredging, however5 a deDt'r. of 31 feet could be reached. In its review of port conditions and traff:iz, rhe mi sion hbe1ieves that t-he development of Topolobnmpo as a deen water nort wo.LJ .nvolve significant new investments and at the same time wou.Ld have negatave effects on Gnuvmas and Mazatlan, both of which are onerating below capacity. Go Paci fi_e Coast Distribution of Jet F1-el 4036 A problem+1, .ha- req ires *wz t solDutior. concerns the supponl f jet fuel to Pacific Coast airports. At present jet fuel is moved by road from the Atzcapotz&1co and Scalamanca refin.eries to the Pacific, Distances are .inrg and transport costs high, and in the case of La Paz where the jet fuel arrives by ferry in drums, the supply is irega ar, cOS+ty nd 1i-+e. (W. 1.it.er on under active consideration which appears to the mission to be the most viable vould involve the freighting of the product by road or rail, capacity permit- ting, from Minatitlan to Salina Cruz. Its distribution to West Coast airpiorts would be v-under-taken through the employment of a small tar.ker, probably iQn the 6,000 ton class. - 30 - V. TRANSPORT POLICY AND COORDINATICN A. Policy Objectives 5.01 The problem of the transport of oil products inevitably has occnpied a great deal of attention within Pemex. It has allocated a significant pro- portion of its scarce resources -- approximately 15t of the investment budget in the past five years ---towards renewing and expanding its transport facil- i-ieS, Marked nrogress has been made in the planning and administration of operations. More importance is being attached to future long-term planning, with a plannning period of 10 years being thought more suited for the deve2op- ment of petroleum resources than the six-year Presidential span currently being used, n.o2 Pemex seeks the least cost alternative in tranqnorting oil to the consumer. Its aim is to be able to operate a well-balanced system which w-L.) permit oil to move by the most economic mode or combined m-odes of transpor+t -- according to the product. It is within this context that it has set certain guidelines and priorities. Within Pemex, prority is given. in order of impor- tance to pipelines, tankers, roads vehicles and railroad tank cars. Certain volumue conditions mriust be fulfilled before either pipelines or tankers mayn b used economically. Both these modes require the allocation of investment fAinds and must, therefore, compeve wi4th the alternative needs of the company, Thc use of road transportation has gained ground. In using the railroads ard highways to transport distillates Pemex is now gided by a policy of equan. die-- tribution between the two modes of inland transportation., Prior to this pclicy objecl-tive, instituted five years ago, the railways were Eiven first choiee a-d tank trucks were used for those movements where no rail existed or iwhere the lengLh oL the haul was such as to maike talk car movements impracticanl P-a;- roads have been relegated to last place for distillates, although they st,l' carry the bulk of tihe fuel oil consumed in Mexico. B. Organization and Administration 5.03 Transport operations and planning in Pemex are widely scattered through different departments. The major group intervening in decisions and operations affecting the transport and distribution of petroleum and natural gas comprise the following: Crude Pipelines and Natural Gaslines Primary Production Directorate Products Pipelines Industrial Production Directorate Tankers, Road and Rail Cormercial Directorate Under this system of responsibility, Primary Production deals with modes of transport connected directly to producing fields and Industrial Production with p-4pelines connected to the output from refineries, All other modes of trans- port -- tankers, tank trucks and tank cars, are handled by the Commercial Directorate which is also responsible for the final stages of distribution. - 31 - 5.0i. The Commercial Directorate was recently reorganized. It comprises three departmients, namely Domestic Sales, Export Sales and Marine. The senior positions have been filled by staff with a technical background and a high level of experience and competence. drawn primarily from other areas xi thin Pemex. The result has been reflected in more rapid decisions, better cocrdi- nation and in an improved distribution svytem of netroleum products. The supporting staff has also been strengthened. C. Coordination 5.05 Notwithstanding these changes, matters affecting the entire trans- nortation qeA-.ntr cnnti -ue to be infornmlly diseussd hv the Produiction wnrd Sales Cowmmititee. Decisions taken by one group are referred to other groups ffor infonrmnl .ommen+- Nn ornminr i-n +.he incs+ti+tuinnal senezp -aL 3: ra~:.:- on da,a frorn the Primary ProducT,on Sub- ljre tIorate of Pemex. MEXICO PENEX: PETROIZUl TRAN,,PORT PrincipaLL NaturaL Gas PipeliMLes in Mexico Diameter Lenlgth Compressor Year Tota:L Capacit:y (inches) (kilometers) Stations Installed Investment (miillion clabic (Pesos million) f'eet per fty) Northern TransmLssicn stem Reynosa - Monterrey 22/24 250/130 1 958/69 100,000 380 Monterrey - Chavez 16 309 2 1952/,;9 105,0(0 100 Chavez - Chihuahua L2 4213 2 1961 128,000 60 Chavez - Torreon 1L2 33 - 1960 9,000 40 Escalon - Lago del Rey 8 104 - 1968 ,20,000 - Esobeda - Moncla.va 10 17:3 1 1959/68 109,900 90 Matamoros -Cd. Aleman L2 18:3 _ 1950 31,0(0- Revnosa - IMonterreyl/ 1/ L4 240 194E n.a ,,75 Cd. Aleman - Monterrey=/ 1L2 154 - 1930 n.a,. 30 Southern Transmissicn stem Cd. Pemex - Mexico 24 240/280 9 1961/68 200,000 615 Mexico - Salamanca : 269 1 1961 138,000 100 Salamanca *- Guadalajara L4 234 - 1967 97,000 40 Vta. Carpio - Tlalcheuol 6 180 - 1968 ,36,000 n.a, Angosteira - Vera Cruz 20 7 ? - 195, 25,000 n.a. La Venta - Pajaritos (Ethane) 8 43 - 1968 8,0oo 17 I/ Private Source: Pemnex TABLE 6 MEXCO PEMEX: PETROLEUM TRANSPORT Pipeline Operating Costs Y Centavos Centavos US Cents 500 kilometer pipeline bl-km Ton-km Ton-km 10 Inch Pipeline - Flat Terrain 20,000 b/d o.4697 3.7871 0.3030 42,-oo h/d 0.3252 2.6220 0.2098 - 2,240 Meter gradient 20,000 b/d 0.5596 4.5119 0.361( n2,o00 b/d 0.3951 3.1856 0.2548 12 Inch Pipeline - Flat TPrrnin Q1 ,0 /d o 8 2.5711 0.2377 60,000 b/d 0.2827 2.2794 o.1824 - 2n21,C Mete.r gradient. 35i bnn h/d 0-4,41I 3 5888 0.2871 60,000 b/d 0.3433 2.7680 0.2214 14 Inch Pipeline - Flat Terrain )48,OO( b/d 0.2689 2.1681 0.1734 7500 b/dlf 0.2 s 1.9810O 0.158)4 - 2,240 Meter gradient 48,000 b/d 0.3376 2.7220 0.2178 750 b/d 0- 30 f r77 r.80 0.1985 L/ Based on 350 day operating year. Source: Based on data from Pemex (Industrial Prodaction Sub-directorate). TABLE 7 NE=CO PEMEX: PETROLERUi TRANSPORT Pemex Tanker Fleet as of April 30, 1970 Mane Year Years in Capacit;y - -ns+ruct+d DWTerion n (Barrels) 1. Sa1a-Lanca 19L8 22 '1Al8 -jl 2. Ignacio Allende 1954 16 17,752 143,920 T 1ne 1i IA w1rA - 1 0 3. azaro Cla,uenas. 15 51an 3j4 4. Guadalupe Victoria 1958 12 19,934 161,852 f'. T n-ii -o L.- -i -'wue r96 14 IL -1 7 I.r4 IC:827 6. Juan Alvarez 1955 J.5 19,100 154,192 L I 1967 I ,c Atf1 121 977 8. Jose Maria lIorelos 1967 3 20,495 157,012 9. Mieguel Flidalgo 1967 3 11,085 78,513 10. Plan de San Luis 1967 33 15,590 121,277 1i. Plan de Ayutla 1967 33 20,L88 157,012 12. Plan de Guadalupe 1967 3 20,460 157,012 13. Vicente Guerrero 1967 3 8,753 54,536 14., Mariano Escobedo 1967 3 9,400 72,473 15. Francisco I. Madero 1968 2 20,500 157,012 16. Venustiano Carranza 1968 2 15,577 121,277 17. Alvaro Obregon 1968 2 20,463 157,012 18. Plutarco E. Calles 1968 2 15,558 121,277 19. Benmto Juarez 1968 2 20,18h 157,012 20. Plan de Ayala 1968 2 20,397 157,012 21. Melchor Ocampo 1968 2 20,402 157,012 22. Emiliano Zapata, 1970 1/12 2,910 20,834 352,889 2,741, 079 Source: Pemex IYEXco PE2TEX: PETROLEUM TRANSPORT Supply and Demand of Crude Petroleum and Refined Products (thousand. barrels dai:Ly) Annual Averag e Percent Change 1959 1964 :L965 1966 1967 1968 1969 19, 5-64t 1964-69 1959-69 Pro ducti on ,rude anri Condensates 264.1 315.8 323.2 331.9 364.5 389 .0 410.6 ,3.6 5.4 4.5 lqatural Cras Liquids 25.6 38o 0 38.8 38. o 46-2 49 .5 5C.7 8.2 5.9 7.1 Total 289.7 353.8 362.0 369.9 410.7 438.5 461.3 4.1 5.5 4.8 Relined Products Importis 22.9 25.3 24.8 34.3 31.9 32 .0 n.a. 2.1 6.0 / 4.1 I/ Domesti.c Demand L.PG 19.1 35.7 41.9 4L6.3 49.7 51L.7 -- 13.3 9.7 11.7 IDistillates 2/ 139.8 183.3 1'91.4 2C)5.9 263.9 24(.4 -- 5.6 7.0 / 6.2 1/ Others 113-4 98.5 95.5 1C)7.2 79.3 123.3 -- -2.9 5.8 I/ 1.0 Total 272._3 317.5 328.8 359.4 392.9 415.4 n.a. 3.1 6.9 i/ 4.8 i/ Crude and Products Ecpo:rts 36.2.l 46.9 rl 79 46. 7 49.4 414. 44. 6 5. -1.3 2.1 j To 1968 only L, Gasoline, jet fuel, kerosene, diesel n.a. = not available Source: Pemex co TABLE y MEXICO PEMEX: PETROLEUM TRANSPORT Domestic Consumption of Refined Products 1959. 1964, 1968 (barrels daily) Annual Average Chanzges 1959 1964 1968 1964-68 1959-68 LPG 19,064 35,815 51,749 9.7 11.7P Casoline 79,093 95,985 126,450 7.1 5.3 Kerosene 31,087 31,557 33,527 1.5 0.8 Jet Fuel - 3,012 6,463 21.0 - Diesel 29,597 53,267 73,889 8.5 10.7' F.0. 93,078 73,076 87,9504 4.6 -0.o All Others 20,399 25,643 33,715 6.3 5.4 Subtbaw 272j318 318;355 4I3 297 6.7 417 Natural Gnal 1j 1,7 4- 60 217,176 10.2 16.6 Total 326,923 L64,542 630L73 7.9 7.6 Note: Natural gas c-on-erted to barrels of oil eauivalent on the basis of 5,000 cubic feet of gas for each barrel of crude petroleum. Source: Compiled from Pemex figures. TABLE 10 MEXICO PiMEX: PETROLEUM TiANSPORT Movement of Refined .Products b Pipeline - r~~barrels dailv! 1965 1966 1967 1968 1969 iadero-Cd. - Victoria- Monterrey-Gomez Palacio- ChThuahua 23;615 2355923 274874 30,j62 32,j439 Salamanca-Guadalajara- Aguascali-ntes 81l55 8,623 9,428 9,319 lO,G58 Salamanca-Morelia 2,207 2,135 3,825 41,15o 4,07 Ntziatit2g-,n-S l- -3n C ru z 3542141l3,'6 3,71 3v7 Minatitlan-DMxico 19,213 29,41U 36,231 44,162 49,148 (propane) 2,957 2,427 3,009 3,522 3,933 I-~J~'otal 91L,6L41.L 7737.LJ. ''7,~I48JL4 J.0Ujc6 .L7"4.U33 Source: Pemex TABLE 11 MEXICO PEMEX: PETROLEUM TRANSPORT Transmnission of Natural Gas by Pipeline (Million cubic feet/day) Northern Southern Total System System 1965 203.15 371.26 574.41 1966 225-82 419.77 645,59 1967 231.27 461.98 693.25 1968 269.75 468.96 738.71 1969 3041)4 524.73 828.87 Amrernry Annnal Rqte nf Increase 1965-69 10.7% 9.0% 9.6% So,,-ce: Pemex 0 IC cc cz 52 F C) C \) CX) ) ( fJ CC C a)a a) r' ~ IvI CX) CC coZ: .4 C) CC) t) _Q t_\ C' H I ~~1 (Y~ CX) -41 t-4 :t 0) N 1P , C) C) C) C) O r1 t4 C) C) C) C) S CC) CC) CC) a:) CX) F G~~~~~~~) _s . c CT C"l) (Ic) ' r \ c1 _J uP C z E 4 - C) ui H- '.o C) C) C-- to~~~ovg HI tO '\ Co_J ) ) a) Si .4n (0 u 'U'\ 0 ~ ~~~- cc~~~~$ ^ p oo U\ _J CO 0~ w cI cr' _t CX) C)- 4 C\ CC 'C) CX) C"J 0,~~ E-i E- C- El r rl CC ON C~~~~~~~~~l 02~~~~~~~~~~0 p C) -L0 -:I f\J CN4 0% C2 0 -ri Hv- 1' 0% HX C, 'Lcfi NS, \i a)- a) F.1 a)~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~- 0 CN 1j0 \ -- CX 0ON ON N 0\J ONz (Y% rI v- r-I ri rI MA T31 , PEI,EX; PETROLEUlvM TR'USPOa-L Volumes Transported by Tankeri/ (Thousands barrels) 1965 1966 196o 196o 1969 197 Distillates!/ Total 20,238 19,016 18,506 21,892 22,810 27,729 Gulf Coast 8,494 6,958 5,605 7,732 7,722 8,70G Pacific Coast 11,744 12,058 12,901 14,160 15,088 19,024 Heavj Products3/ Total 38,582 40,359 41,817 43,576 47,143 5271 Gulf Coast 34,319 36,940 37,540 40,593 43,150 47,771 Pacific Coast 4,273 12,419 4,277 2,983 3,993 4,500 All Petroleum Products Total 58,821 59,375 60,323 65,468 69,953 80.COO Gulf Coast 42,813 43,898 43,145 48,325 50,872 56,476 Pacific Coast 16,008 15,477 17,178 17,143 19,081 23,524 2 EExcludes movement of ammonia and other products which in 1969 amounted to apDroximately 2,000,000 barrels 2/ Includes gasoline, diesel, etc. 3/ Includes crude petroleum. residual fuel oil, etc. r1 Programmed TABLE 14 MEXICO PEMEX: PETROLEUM TRANSPORT Transport Sector Investments, 1965- (Pesos Mil ins , 5St,orag'e & Pipelines Tankers Tank trucks Distribution Total 1965 177 134 11 215 537 i66 353 39 28 270 690 1967 389 280 5 322 996 1968 151 216 1969 14T1 24 14 63 242 Total 1,211 772 62 1,035 3,080 Annual Averwge 242.2 15-.4 12.4 27 616.C TABLE 15 NEXIC 0 PEMEX: PETROLEUVI TRANSPORT Transport Sector investment Program (Pesos itillions) Tank Storage & Port I~Ip_llnes Tankers Trucks Distribution Facilities Total 1971 1,9003.0 179.4 - 71.0 25.0 15,73.4 1972 428.0 237.5 - 70.0 25.0 76o.°0 1973 210.0 179.4 25.5 72.0 25.0 51i.9 1974 297.0 - 13e5 70.0 25.0 40505 1975 231.0 250.0 25.0 70.0 25.0 6Oi.0 Total 2,169.0 846.3 64.0 353.0 125.0 3,557.3 Annual Average 433.8 169.2 12e8 70.6 25.0 711s4 Source: Pemex