NuStar Energy L.P. (NYSE:NS) and PMI have agreed to expand operations, under which NuStar Energy shall transport and store Naptha for PMI. Naptha is used as a gasoline blending equipment. The duration of the agreement is 10 years and extends a previous agreement of 10 years long, made in 2005.
Under the agreement, the Naptha produced at Northern Mexico’s Pemex’s Reynosa-Burgos Complex will be transported by NuStar Energy by the NuStar Burgos-Valley pipeline system . it will be stored in the NuStar’s terminal in Edinburg, Texas. The naptha from here would be delivered into Tranmontaigne’s terminal. This is located in Brownsville, Texas. The services under the agreement has commenced from April 1, 2015.
This agreement, and a related capital investment is aimed to provide a much efficient, economical and safe method of delivery. Earlier, trucks were used to move the Naptha from Mexico to Brownsville, and will now be replaced by the pipeline.
In a statement released by Brad Barron, CEO and President of NuStar Energy L.P.(NYSE:NS), they have expressed their plans to expand the operations through the latest contract. They have also stated PMI as “an outstanding partner for NuStar”. Barron believes that the agreement “will continue to generate returns” for both the companies involved in the agreement for the next decade to come.
Also, Barron has expressed his intention of continuing the joint venture work with PMI of transporting propane. This is being transported from the US into Northern Mexico. Also, he hopes to receive an update on the JV in the coming days.
Also, it seems that PMI is also happy that the agreement is now complete. The officials of PMI have stated that they feel confident on the new project. They also have expressed their intentions of continuing to develop key infrastructure, which shall improve Pemex and Mexico’s energy performance. They have also mentioned that the transaction should foster the integration between the North American Energy markets.