WRAPUP 1-S.Korea, Japan firms in first fuel sales to Mexico

* Idemitsu sells term diesel, SK Energy gasoline to Mexico

* Glut drives Asian suppliers to seek more distant buyers

By Seng Li Peng and Osamu Tsukimori

SINGAPORE/TOKYO, September 5 (Reuters) - Mexico is buying gasoline and diesel fuel from two Japanese and South Korean refiners for the first time this month, as Asian sellers seek more distant markets on rising competition and weakening demand.

Asian suppliers of diesel and gasoline have been saddled with excess supplies after China abruptly ended months of hefty imports because of heavy stockpiles after the summer Olympics. They are also looking askance at India, where Reliance Industries (RELI.BO) is expected within weeks to start up a massive new refinery.

Falling gasoline stocks in the United States due to refinery run cuts and outages during Hurricane Gustav may have also driven Mexico to seek rare parcels from the East, traders said.

In Japan, where domestic demand is falling with unexpected haste, No. 3 refiner Idemitsu Kosan Co (5019.T) announced on Friday its first term diesel export deal in over four years with PMI Trading Ltd, trading arm of Mexico's state oil monopoly Pemex. [ID:nT135565]

And South Korea's top refiner SK Energy Co Ltd (096770.KS) has sold a spot gasoline cargo to PMI for the first time ever, traders said.

The mid-September 30,000-tonne parcel of 92-octane gasoline was sold at a discount of $1.00-$2.00 a barrel to Singapore spot quotes.

"This is the first time they are cutting a deal with the Mexican trader. Mexico is short of about 30,000 tonnes (about 250,000 barrels) of gasoline a day," a trading source said.

While record prices have curbed demand for motor fuels in many industrialised countries, the Mexican government will shell out about $25 billion in subsidies this year to keep gasoline about $1 cheaper than in the United States. [ID:nN01323142]

While demand is growing, Mexico's refining capacity has barely risen in the past two decades, leaving it with an expanding hole to fill with costly imports.

"Mexico is a sizable gasoline importer. Car sales are strong in the country because they are not that expensive," said Victor Shum, analyst at consultants Purvin and Gertz in Singapore.

Purvin & Gertz estimates that Mexico's six refineries produce 460,000-470,00 bpd of gasoline versus consumption of around 750,000 bpd.

SUPPLIERS ON THE PROWL

Mexico usually plugs its production shortfall by getting gasoline supplies from Europe, Canada and the U.S. Gulf Coast, where it operates a joint venture refinery with Shell, but stocks have been tightening there but sloppier in Asia.