SAN ANTONIO--(BUSINESS WIRE)--July 25, 2005--Valero L.P.
(NYSE:VLI), a mid-stream logistics partnership partially owned by
Valero Energy Corp. (NYSE:VLO), has signed agreements with Pemex-Gas y
Petroquimica Basica and P.M.I.(R) Trading Limited (PMI). The project
consists of constructing more than 110 miles of pipeline, and shipping
oil products from Pemex's assets in the Burgos Basin near Reynosa,
Mexico, to Brownsville, Texas.
In a separate transaction, Valero Marketing and Supply Company, a
subsidiary of Valero Energy, has forged a five-year agreement with PMI
to almost double the amount of liquefied petroleum gas (LPG) it
currently supplies to PMI, to help serve the LPG demand in the
northeastern part of that country.
"We're excited about partnering with the Pemex group to help meet
the increased need for fuel on both sides of the border," said Bill
Greehey, chairman and CEO of Valero Energy. "We've enjoyed a great
relationship with the Pemex group for the past several decades, and we
look forward to working with them for many years to come." Greehey
added that over the years, Valero has purchased significant volumes of
crude oil from the Pemex group and has supplied it with LPG, natural
gas, gasoline, gasoline blending components and distillates.
Valero L.P. will construct approximately 110 miles of new pipeline
with the capacity to move about 32,000 barrels per day (BPD) of oil
products from Pemex's assets in the Burgos Basin near Reynosa to a
terminal in Brownsville.
The pipeline project is scheduled for completion in mid 2006 and
will cost approximately $54 million. As part of the agreement, PMI
will have an approximately 10-year shipping agreement with Valero L.P.
to move the oil products once the pipeline is commissioned.
This eight-inch pipeline segment runs over 13 miles of Mexican
territory, having its origin in Pemex's plant and going up to the
international border between Arguelles, Mexico, and Penitas, Texas.
Construction in the United States includes about 33 miles of
eight-inch pipeline that will run from the Texas/Mexico border to
Valero L.P.'s products terminal in Edinburg, Texas, as well as
approximately 68 miles of 10-inch pipeline that will run from Edinburg
to Valero L.P.'s Harlingen, Texas, terminal and on to a terminal in
Brownsville. The U.S. pipeline segment, to be operated by Valero L.P.,
will also connect Valero L.P.'s existing Valley products pipeline
system, which originates in Corpus Christi, Texas, to terminals in
"We're excited to have this opportunity to work on another major
international project that is expected to be accretive to earnings,"
said Curt Anastasio, president and CEO of Valero L.P. "Our agreement
with the Pemex group on the shipment of LPG has been very successful,
so we're excited about working with them again on this new pipeline
Valero L.P. launched its first international venture last summer
when it began shipping LPG from Valero Energy's Corpus Christi and
Three Rivers, Texas, refineries to its new terminal in Nuevo Laredo,
On April 1, 2005, Valero Energy began supplying PMI with a volume
of approximately 10,000 BPD of LPG -- almost twice the amount the
company had been supplying since last summer. A majority of the LPG is
being produced at Valero Energy's refineries located in Corpus Christi
and Three Rivers. As with the earlier agreement, Valero L.P. is
responsible for shipping the LPG to its terminal in Nuevo Laredo,
Mexico, where it is then delivered to PMI. From there, the propane is
sold by Pemex-Gas y Petroquimica Basica to its customers throughout
"Last summer, we began supplying a minimum of 5,000 barrels per
day of LPG to PMI, and the transaction has been a win for everyone
involved," Greehey said. "With this new agreement, Valero Energy is
supplying even more LPG from two of our refineries, the Pemex group is
receiving a larger, stable supply of fuel for its customers, and
Valero L.P. is able to increase the volume of its international
Valero Energy Corporation is a Fortune 500 company based in San
Antonio, with approximately 20,000 employees and annual revenues of
approximately $55 billion. The company owns and operates 14 refineries
throughout the United States, Canada and the Caribbean. Valero's
refineries have a combined throughput capacity of approximately 2.5
million barrels per day, which represents approximately 12 percent of
the total U.S. refining capacity. Valero is also one of the nation's
largest retail operators with more than 4,700 retail and wholesale
branded outlets in the United States, Canada and the Caribbean under
various brand names including Diamond Shamrock, Shamrock, Ultramar,
Valero, and Beacon. For more information, please visit www.valero.com.
About Valero L.P.
Valero L.P. is a master limited partnership based in San Antonio,
with 9,150 miles of pipeline, 94 terminal facilities and four crude
oil storage facilities. One of the largest terminal and independent
petroleum liquids pipeline operators in the nation, the partnership
has terminal facilities in 25 U.S. states, Canada, Mexico, the
Netherlands Antilles, the Netherlands, Australia, New Zealand and the
United Kingdom. The partnership's combined system has approximately
77.6 million barrels of storage capacity, and includes crude oil and
refined product pipelines, refined product terminals, petroleum and a
specialty liquids storage and terminaling business, as well as crude
oil storage tank facilities. For more information, visit Valero L.P.'s
web site at www.valerolp.com.
Pemex, Mexico's state oil and gas company, is among the five
leading oil companies in the world and its activities include the
exploration of hydrocarbons as well as the production, storage,
distribution and sale of crude oil, natural gas and petroleum-based
products. For more information, visit Pemex's web site at
CONTACT: Valero Energy Corp., San Antonio
Mary Rose Brown, 210-345-2314 (Media)
Eric Fisher, 210-345-2896 (Investor Relations)
SOURCE: Valero L.P.