Print Page  |  Close Window

News Release
New Agreements Strengthen Relationship between Valero Energy, Valero L.P. and Pemex

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 Brownsville.

"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 project."

Propane Agreement

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, Mexico.

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 Mexico.

"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 business."

About Valero

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

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

About Pemex

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.