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Pemex says they have lost 34 percent of the market due to the entry of private companies…and they want it back

Mexico City, Mexico — Mexico’s oil company Pemex says they have lost approximately 34 percent of the country’s gasoline market due to the 2013 reform. While Pemex says they have lost a third of the gasoline market, Mexico’s president Andrés Manuel’s priorities López Obrador wants to recover it.

The 2013 reform removed Pemex’s exclusivity in the fuel market, but the president has sent a new reform aimed at allowing the company to gain ground again. Pemex says that due to that reform, the oil company has lost about 34 percent of the stations it had before the reform.

This mean the fuel sales market is no longer exclusive to Pemex and the state-owned company has continuously lost participation, but the latest initiative to reform the Hydrocarbons Law could curb private incursion into the sector, one of President Andrés Manuel López Obrador’s priorities.

The initiative was presented just a few days after the president said that his government would do everything possible to prevent the oil company from continuing to lose the market in the sale of gasoline, diesel and other fuels.

Since the entry of the first private brand to the gasoline business in the country in June 2016, Pemex has lost 34 percent of the service stations that carried its brand. At the end of 2020, the latest data available, Pemex added 7,436 stations operating under its brand, a number well below the 11,379 it had in the second half of 2016 before companies such as La Gas, Hidrosina and Gulf stations were opened.

According to the latest data from the National Organization of Petroleum Dealers, Pemex continues to lead the sector with about 60 percent of the total gas station market. However, in just over four years, Pemex saw a drop in the sale of public gasoline and now, market shares with private companies such as BP, Oxxo Gas, G500, Exxon Mobil and Total.

In recent months, the Energy Regulatory Commission (CRE), the oil market regulator, has slowed down the issuance of new permits for the opening of gas stations outside the Pemex brand.

These private companies have also gained a market in the import of fuels. Brands such as Shell, Total, BP and Exxon Mobil have begun to sell the gasoline that they import from US refineries and with this, the national company has drastically reduced its purchases of gasoline abroad, which had been increasing for years as a side effect of the low production at Pemex’s refining complexes.

More than a year ago, the Ministry of Energy stopped making public the data related to the import of gasoline. But the latest data released by the agency, from December 2019, indicates that private companies already accounted for 20 percent of the import market for this fuel.

The data published by Pemex confirm that the downward trend of the company’s imports has continued in recent months, also driven by the historical decline in demand that was triggered by the social distance generated by the coronavirus pandemic.

In 2019, the company headed by Octavio Romero Oropeza imported an average of 528,000 barrels per day of gasoline, by last year this figure had already fallen 26 percent to 388,000 barrels per day and the decline has continued in recent months, although at a slower pace.

The diesel import market has been used more by private companies, which, at the end of 2019, already accounted for 36 percent of the purchases of this fuel from abroad.

Now, the new reform initiative will put a new brake on permits for new brands and includes an article to suspend them if they represent a danger to national security, energy security and the national economy. With this, the Mexican oil company could increase its relevance in a market that still dominates, but in which it was increasingly adding more competition.

Mexico’s president has continually hit brick walls with his new reform as companies file Amparos of protection.

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