Gas Stations Closed Down, PEMEX Sets New Production Forecast

Regulation governing dispensers at gas stations came into force last week and stations have been closed for non-compliance. Is there a shortage of equipment needed to meet the regulation’s standards or have gas station owners been dragging their feet? Meanwhile, PEMEX Director Octavio Romero issues production forecasts for 2024 and documents suggest an attempt to limit private companies in Mexico’s energy sector.

All this and more in The Week in Oil and Gas!

What's the Real Story Behind Gas Station Closures?

Gas stations across the country were shut down after they were found to be non-compliant with NOM-005 SCFI 2017, which was put in place to ensure that consumers receive the fuel they pay for.

The regulation came into force on Oct. 8 having previously been delayed due to COVID-19. Gas station owners supported by ONEXPO, the gas station association, are protesting saying that most have already purchased the upgrade on equipment that the regulation requires but that “manufacturers and suppliers of these dispensaries do not have sufficient inventory (stock) of such equipment and escalation kits in Mexico.”

A recent interview with Raúl Silva of Petroassist suggests a different reason. According to Silva, whose company offers the upgrades, many station owners chose to delay the costly investment that compliance requires and, in some cases, were hoping for another delay to the regulation. “The deadline for the regulation was in early October but it seems that many companies were counting on another extension that is not going to happen,” said Silva.

PEMEX Sets 2.294MMb/d Production Prediction for 2024

PEMEX Director Octavio Romero said this week that PEMEX should produce 2.294MMb/d at the end of the MORENA government in 2024 and assured a congressional committee that the NOC would increase production to 1.94MMb/d by the end of 2020.

The government had put the “rescue” of PEMEX as a primary goal and President Andrés Manuel López Obrador has repeatedly assured Mexico that PEMEX would reach 2.4MMb/d in production by 2024. While this renewed forecast is just short of that, it would be a superb turnaround for the struggling company and a huge victory for the president.

Doubts remain over the viability of both targets considering the recent drop in oil demand and continuing lockdowns in many parts of the world, as well as the complications that COVID-19 has caused in developing PEMEX’s priority fields, already well behind schedule.

Government Imposing Further Restrictions on Privates?

An article from the Financial Times today reports that the country’s regulators are moving to limit and restrict the involvement of private companies to “protect state oil and utilities companies.”

The article claims FT has seen documents outlining plans to limit private investment into the energy sector and says this is the next stage in a long-running attempt to repress competition for PEMEX and CFE.

A CFE spokesperson said that the documents were internal documents that “modified internal processes in support of the fight against corruption and transparency” and should “not be misinterpreted,” reported the FT.