The monopoly that Petróleos Mexicanos S.A.
("PEMEX") has long enjoyed over gasoline and diesel
marketing and sales in Mexico has come to an early end, as Mexico
has announced that it is opening the retail fuel market to private
participation nine months earlier than originally planned.
Before the reforms to Mexico's oil and gas industry triggered
by a constitutional amendment in 2013, state-run PEMEX was the only
downstream player in the country. Service stations were operated by
PEMEX franchisees, and the price of gasoline was both
price-controlled and heavily subsidized by the Mexican government.
To the chagrin of the Mexican public, however, fuel prices in
Mexico were nonetheless significantly higher than comparable fuel
prices in the U.S.
Similarly, before Mexico's energy reform, PEMEX was the only
entity authorized to refine, import, and export crude oil and
refined products. After years of underinvestment in the sector,
there are now only six refineries operating in the whole of Mexico,
which are simply not enough to meet the country's growing
demand for gasoline, diesel, and petrochemicals. As a result, PEMEX
currently imports more than 50 percent of the gasoline and diesel
consumed in Mexico.
Mexico hopes this situation will change soon. Transitory Article
14, Section II of the Hydrocarbons Law (the "Law")
enacted in 2014 provides that Mexico's Energy Regulatory
Commission ("CRE") may issue permits for the marketing
and sale of gasoline and diesel beginning on January 1, 2017. The
Law also authorized Mexico's Ministry of Energy
("SENER") to issue permits for the import of gasoline and
diesel beginning on January 1, 2017 (or earlier, if Mexico's
antitrust authorities consider that the market conditions permit
it).
On February 23, 2016, during remarks at the IHS CERAWeek conference
in Houston, Texas, Mexican President Enrique Peña Nieto
announced that imports of diesel and gasoline into Mexico will be
permitted beginning on April 1, 2016, rather than at the beginning
of 2017. From and after that date, the SENER may grant diesel and
gasoline import permits to all applicants who meet legal
requirements, effectively allowing independent service stations to
freely import gasoline and diesel into Mexico. In the short time
since Peña Nieto's announcement, the SENER has already
received hundreds of requests for permits to build new independent
service stations.
Mexico is also taking action regarding retail prices for diesel and
gasoline. Transitory Article 14, Section I of the Law provides that
the Mexican government will set the maximum retail price for diesel
and gasoline between January 1, 2015 and December 31, 2017, taking
into consideration transportation costs, regional differences,
retail and distribution infrastructure, inflation, and
international prices. After January 1, 2018, however, diesel and
gasoline retail prices will be determined by the market.
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