PEMEX Controls the Fuel Supply in Mexico

On the back of the 2014 Energy Reform, PEMEX lost a large share of its gas stations, as the NOC lost 38 percent of its stations to other companies in 2017. PEMEX controlled 94.7 percent of the 12,059 gas stations in early 2017. Previously, PEMEX had 11,423 stations under management, but by September of that same year, it had 7,079. By the beginning of 2022, the company held 53.6 percent of the gas stations market. Nevertheless, a market analysis revealed that PEMEX dominates the market as a supplier.

According to PetroIntelligence, PEMEX still supplies 83 percent of the gas station market and almost 50 percent of non-franchise gas stations. In 2019, the state-owned company supplied 83 percent of the market, but the figure dropped to 73 percent by 2021. In 2022, the percentage hit 85 percent.

In 2021, PEMEX presented a plan to recover part of the supply market by providing discounts and support with gaining CRE permits. According to the National Organization of Petroleum Distributors (ONEXPO), many service stations returned to work with PEMEX during 1H22. The companies that lost the most stations to the NOC were Gulf Oil, with 29, BP, with 23, and TotalEnergies, with 34.

Mexico’s government has invested heavily in increasing PEMEX’s refining and restoring its control over the market, which proved to be a complicated and costly operation. What is more, this government strategy has created friction with Mexico’s trade partners and has brought up discontent in the private sector because of uncertainty and asymmetrical competition against state companies.

In addition, a lot of private investment has remained stagnant since the pandemic. CRE’s permit approvals stalled, partly due to the pandemic. ONEXPO reported that each gas station costs approximately MX$25 million (US$129,425) which, without the approval to operate and multiplied by the several permits lagged, represents a great amount of investment stalled. According to PetroIntelligence, from CRE’s recent approval permit spree, most were for PEMEX.

TotalEnergies announced recently that it will stop managing 11 gas stations in Mexico, pointing toward government regulations as the cause of the decision. The company said that the service station sector has been affected by the government’s policy direction, choosing to bolster PEMEX instead of enabling greater private participation in the market.