- Authorities to request increased disclosure of information
- Concern over discretion of the authority to revoke permits
- Likely to allow Pemex more participation in the market
Fuel importers in Mexico are poised to face tougher conditions in continuing their operations after Mexican authorities revived a regulation that had been blocked by a federal judge for almost a year, reports Platts.
Improving competition in the market
Mexico’s Energy Secretariat on Feb. 17 issued a decree that repealed judge Juan Pablo Gomez Fierro’s March 2001 suspension to a regulation issued in December 2020 that limits the duration of import permits from 20 years to five years and imposes stricter rules to obtain them.
Gomez Fierro’s suspension was made on the grounds of improving competition in the market, had a general scope and applied to all market participants.
Now, all companies will be obligated to comply with the December 2020 regulation unless they had obtained an individual suspension. Market observers told S&P Global Platts most participants are exposed to the regulation.
“The level of information companies are now required to submit is enormous,” said Diego Campa, a partner at law-firm Campa & Mendoza in Mexico City. Campa added under the regulation companies must prove their operations do not “affect the country’s energy balance,” a requirement particularly difficult to prove.
The obligation to assess the impacts of the operation in the national energy balance should probably be the responsibility of the regulator, not the companies, he said.
Discretion to cancel permits
Another worrisome element in the regulation is that the Energy Secretariat, or SENER, has greater discretion to cancel permits, said Bernardo Cortes Araujo, a partner at Cortes & Quezada, a law-firm in Mexico City.
“The number of import permits has dramatically dropped in the last two years, which will very likely result in more concentration of the market in the hands of state oil company Pemex,” Cortes Araujo told Platts.
Mexico currently imports a little over 500,000 b/d of gasoline to meet its demand, which ended 2021 slightly above 800,000 b/d, SENER data shows.
Fuel import permits
Glencore, BP, Trafigura and Windstar are among the companies that lost their permit to import fuels into the country in recent months, either because it expired or it was revoked, SENER data shows.
The only large international companies that still hold long-term import permits for fuels are ExxonMobil, Koch, Tesoro, Shell and Valero.
“The import permits are the most important element to participate in the market; without them, all the investments are down to zero,” Campa said.
Did you subscribe to our daily Newsletter?
It’s Free! Click here to Subscribe