Kansas City Southern (KCS) railroad and Bulkmatic Transport Company announced a memorandum of understanding on August 30 to form a 50/50 joint venture investment that will facilitate and expand the exportation of liquid fuels from the United States to Mexico. 

The project will include the construction of a unit-train liquid fuels terminal located in Salinas Victoria near Monterrey, Nuevo Leon, Mexico. The facility will be served by Kansas City Southern de Mexico SA de CV (KCSM).

The joint venture comes as a direct result of energy reform legislation passed in Mexico in 2013. Recognizing that it lacked the refinery infrastructure necessary to meet its growing demand for refined energy products, Mexico developed legislation which put into motion a process which will culminate by 2018 in the country’s energy markets being fully open to foreign investment and the importation of refined energy products, including gasoline and diesel.

“We are pleased to pursue this joint venture to expand the export of US petroleum products into Mexico,” said KCS president and chief executive officer Patrick J Ottensmeyer. “The terminal will provide vitally needed refined energy products and boost job creation in the United States and Mexico. The project neatly aligns Mexican energy reform goals with US refining companies’ desire to expand their operations into new markets.”

Alfie Bingham, Bulkmatic chief executive officer, said: “We are excited to partner with KCS to create a cost-efficient linkage between Mexican consumers and US producers of refined products. This project will benefit economies on both sides of the border by providing consumers in Mexico access to more suppliers, and refineries in the United States access to important new markets.”

The joint venture partners will invest approximately US $50 million over the next few years to develop the terminal, which will begin limited operations in third quarter and have storage facilities in mid-2018 that will provide retail fuels for the population of the Monterrey metropolitan area.