Pemex is Having a Hard Time Giving Up its Monopoly

Even though one of the goals of Energy Reform is to create a new and free energy market in Mexico, it seems like Pemex does not understand and it is doing its best to keep its monopoly, at least in the fuel market.

Apparently, trying to leave Pemex’s gasoline franchise is a huge headache. Several service stations want to try a different brand than Pemex, but they have found problems leaving the NOC’s franchise.

Different representatives, anonymously, denounced that Pemex Transformación Industrial (TRI) has puts up obstacles to avoid this change by requesting the same documents to initiate the process over and over again.

The NOC (National Oil Company), allegedly, might have even threatened the stations with ending their fuel supply, if they did not sign a new contract.

“Pemex is doing its best to make sure no station can change its brand,” representatives said.

The Energy Regulatory Commission (CRE) separated the franchise and marketing contracts, with the aim of facilitating procedures for those interested in changing their brand to do so within a period of 30 days.

However, representatives denounced that this process can last up to 60 days, preventing the brand change.

In addition, if stations manage to change their brand, Pemex increases the sale price of gasolines and according to the representatives, does not grant credits.

Pemex responded to these accusations by arguing that it is not blocking the change of brand and a proof of it is that there are 68 service stations with different brands and they receive fuel like any other service station.

“Pemex has never threatened or blackmailed customers by cutting supply for the intention of switching to white flag or by already operating with other brands,” the NOC said.

Pemex still continues to report low refining production month after month, and had to close the Salina Cruz refinery, its most important in terms of production.

According to the Secretary of Energy (Sener) database, Pemex refining production was 741mbd (thousand barrels a day) in August 2017; 19% less than same period last year when it was 911mbd.

The NOC’s refining production grew 9% on average during January-March per month, but this metric has decreased 9% on average per month since then, losing the good performance of the first months of the year.

Bottom-Line: There are nearly 12,000 service stations and only 68 have been converted from the NOC? Actions speak louder than words.

New players on the market are offering attractive conditions to work with their brands. Pemex has to adapt and get used to this new environment of high competition.

The NOC must improve its relations with service stations, if it wants to continue as the market leader.

Offering attractive conditions could work…

Importers are undoubtedly benefitting the most from Pemex’s problems in its refineries, and someone has to supply local demand.

Tags: energy, energy reform, hydrocarbons, latam, mexico, oil and gas, pemex
Posted in LatAm, Energy, Energy