Tightening Measures Cause 40 Percent Drop in Gas Sales

As the number of confirmed COVID-19 cases in Mexico climbs to 2,789, measures now in place across the country to flatten the curve are tightening their grip on the country’s oil and gas retail sector. According to Roberto Díaz de León, President of retail association ONEXPO, has reported that nationwide gas station sales showed a 40 percent drop-off in comparison to February.

Mexico, currently in Phase 2 of the pandemic, is expected to move into Phase 3 in the “next two to three weeks,” according to Deputy Minister of Health Hugo López-Gatell, who has effectively become the government’s spokesperson for all COVID-19 matters. While Phase 2 has resulted in a 40 percent reduction in road traffic in Mexico City during the last 20 days of March according to Rystad Energy, the firm believes that April’s road figures will drop a further 10 percent. The tighter restrictions will translate to fewer consumers at the pump.

Díaz de León told Expansión today that he expects sales figures to fall further. “We see a 40 percent decrease in sales volumes, which is increasing. If they decree Phase 3, forget it. We are going to hit sales levels that we have never had before in history,” the director said in an interview.

The rates in March and April follow an underwhelming February, when PEMEX’s flagship Magna brand witnessed a 9.2 percent fall in sales compared to January 2019. Despite the fact that Mexico has not yet reached Phase 3, the date for the sporadic lifting of quarantine measures on non-essential businesses is still set for April 30. Whether this will hold true, only time will tell.

But poor sales will certainly aggravate PEMEX’s already weakened position, having been battered on all fronts by the COVID-19 pandemic. The company is struggling against depressed oil prices, a weakened peso and a 10.77 percent drop in exports prior to the federal government’s announcement of an intentional reduction in exporting crude. All of this, while the company tries to pay maturing debts.

In an attempt to support the struggling company, President Andrés Manuel López Obrador declared earlier this week that the NOC’s tax burden would be reduced to release a further MX$65 billion (US$2.7 billion) and help to sure up its position. Despite this, ratings agency Moody’s, among others, declared the measures would be insufficient to stop the company needing to apply for further financial credit this year.