Tropical storm Ernesto skirts Mexican Gulf coast, kills two

MEXICO CITY (Reuters) - Tropical Storm Ernesto skirted the coast of the Gulf of Mexico on Thursday, sending wind gusts and showers across the state of Veracruz, home to some of Mexico's busiest ports and oil installations.

The storm had maximum sustained winds of 60 mph and was drifting slowly just off the coast in the southern Gulf of Mexico, about 5 miles north of Coatzacoalcos, the U.S. National Hurricane Center in Miami said in its 2 p.m. EDT advisory.

Mexico's government downgraded a hurricane warning for the coast of Veracruz to a tropical storm warning and the NHC said further weakening was expected as Ernesto moved over mountainous terrain on the mainland. However, torrential rain and flooding was expected in Veracruz and authorities reported two deaths.

Officials from state-run oil company Pemex said there were no reports of disruptions to facilities in the region, which include the Minatitlan refinery, producing 185,000 barrels of crude per day.

The eye of the storm had passed the oilfields of Cantarell and Ku Maloob Zaap, which account for just over half of Mexico's oil production of about 2.5 million bpd.

Coatzacoalcos is home to one of Mexico's key oil exporting ports, which has been closed since Wednesday along with Cayo Arcas and Dos Bocas.

Almost all of Mexico's crude oil exports, which totaled 1.425 million bpd in June, are shipped to refineries on the Gulf Coast of the United States from the three ports.

Authorities in Veracruz said they were preparing emergency shelters, if needed, in the flood-prone and densely populated state. The small Mina-Coatza airport, between Minatitlan and Coatzacoalcos, was closed on Thursday and waves of 13-20 feet were reported along the coast.

Ernesto is forecast to plow through Veracruz state and into central Mexico on Friday as a tropical depression.

The storm previously made landfall on Mexico's Yucatan coast late on Tuesday as a Category 1 hurricane, the lowest on the five-step Saffir-Simpson scale, before being downgraded to a tropical storm on Wednesday.

Two people drowned and about 100 houses were damaged as the storm swept through the swampy state of Tabasco toward the Gulf of Mexico, according to local officials.

The storm spared major tourist areas on the peninsula from a direct hit and landed in sparsely populated low-lying jungle, near the port town of Mahahual, 40 miles north of Chetumal, the capital of Quintana Roo state.

Ernesto passed well south of the major tourist resort of Cancun, which saw only heavy rains.

About 2,500 people were evacuated from Chetumal up the coast to Tulum in an area known for its scuba diving and eco-tourism attractions.

Rainfall of 5 to 10 inches, and possibly 15 inches in some areas, was expected in the states of Tabasco, Veracruz, Puebla and northern Oaxaca through Friday, the center said.

August and September are usually the most active months of the Atlantic-Caribbean hurricane season, which runs from June 1 to November 30.

(Reporting by Loan Grillo, Krista Hughes and Lizbeth Diaz in Mexico and Luis Manuel Lopez in Tabasco; Editing by Vicki Allen and Todd Eastham)