Fuel Market Shows Signs of Freer Competition
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Fuel Market Shows Signs of Freer Competition

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Perla Velasco By Perla Velasco | Journalist & Industry Analyst - Thu, 12/08/2022 - 10:11

The current administration’s priorities have faced criticism over hindering free competition. Nevertheless, the reopening of CRE’s permit processes and the reinforcement of private investment seem to indicate that the industry has the strength to endure changing times. While TotalEnergies recently abandoned the management of various gas stations, according to Jorge Mijares, President, National Organization of Petroleum Distributors (ONEXPO), changes how players behave indicate maturity in the industry and the development of a freer market.                

Ready for more? Here is the Week in Oil and Gas! 

SENER Tried to Protect PEMEX from Flaring Policies

According to internal documents Reuters requested, SENER urged CNH and the Ministry of the Interior to not publish recent regulations as they could harm an already weakened PEMEX. SENER tried to block the approval of stricter flaring policies that aimed to restrict how companies managed and quantified natural gas emissions, making it more difficult to justify flaring and giving more power to CNH to supervise it. CNH presented these policies in November 2021 and published them on June 23, after SENER and CNH reached an agreement.

Trends Indicate Maturity in the Gas Station Sector

According to Jorge Mijares, President, National Organization of Petroleum Distributors (ONEXPO), changes in how players behave in the fuel market represent a sign of maturity in the industry. Regarding TotalEnergies’ recent exit from the market, Roberto Díaz de León, Adviser, ONEXPO, said the company will stay in the country and will only abandon management. Díaz highlighted that CRE’s recent permit approval could incentivize new investment in the market.

Fuel Subsidies Cost the Government MX$88.59 Billion

The Ministry of Finance reported that Mexico’s IEPS subsidy cost MX$2.88 billion (US$148 million) in October, an increase in losses of more than MX$1.6 billion (US$82 million) compared to September. This is the seventh consecutive month that the IEPS reports a negative balance. IEPS collection has amounted to a loss of MX$88.59 billion (US$XXX) in 2022. 

ENGIE to Invest in Supplying Puebla’s Industrial Parks

Engie will extend its distribution network to supply 13 industrial parks in Puebla. The system will supply businesses at Textile City, located in Huejotzingo, Puebla, through a 4.2km long transmission line. The company underlined that over the past 25 years, it has invested in three pipelines representing 1,300km of infrastructure and eight renewable energy power plants in Mexico.

Production at Dos Bocas Is Delayed Again

As construction of the Dos Bocas refinery extends beyond initial forecasts, production has been once again delayed until 2023. Industry experts stressed that the country’s goal of being energy self-sufficient by 2024 seems unattainable due to the state of the country’s refineries and delays in key projects, including the Olmeca refinery.

Private Companies Decrease Production; PEMEX Grows Fuel Oil Stock

Private oil production decreased in October, as private companies produced 105Mb/d, a month-on-month decrease of 7.5 percent, according to CNH. Fieldwood Energy and Petrobal reported a 27 percent decrease in production at the Ichalkil and Pokoch fields compared to September at 16Mb/d in October. Furthermore, PEMEX increased its fuel oil stock in October, reaching 1.25MMb in the last week of the month.

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