Mexico mulling buying fuel from far-off India

By Catherine Bremer

MEXICO CITY (Reuters) - Mexico, a major oil exporter but an importer of refined fuel, is mulling buying gasoline from faraway India if prices there undercut costly U.S. refineries, state oil monopoly Pemex said on Tuesday.

Pemex will examine market conditions in the second half of the year, when India is expected to complete a new oil refinery that could take in Mexican crude and ship back refined fuel.

"It's being evaluated and it will depend on price levels," said Pemex spokesman Carlos Ramirez.

Dogged by a lack of capacity at its six refineries, Mexico has been a net fuel importer for several years and currently buys a hefty 40 percent of its fuel from U.S. refineries.

Pemex currently exports an average of 35,000 barrels per day (bpd) of crude across the Pacific Ocean to India.

Its trading arm believes shipping back Indian gasoline could prove cheaper than piping or trucking in fuel from the United States, which buys 80 percent of Mexico's exported oil.

Mexico recently stopped shipping oil to U.S. West coast refineries, a decision based on port infrastructure and costs. Pemex said at the time that it would ship crude to other markets where there were better economic alternatives.

Even if India proves a cheaper option, the process of exporting oil to overseas refineries only to buy back expensive refined fuel hurts Mexican industry and the government, which subsidizes gasoline for motorists.