TotalEnergies Abandons Management of Various Gas Stations

TotalEnergies announced this weekend that it will stop managing 11 gas stations in Mexico, as well as its Bonjour convenience stores. The company points toward government regulations as the cause of the decision. TotalEnergies will cease its operations on Dec. 29, 2022, at the latest. The gas stations will not close entirely but rather operate under the management of other companies, while the rest of the company’s stations will remain open.

According to the statement, 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. “It was impossible to continue with the development of the project in Mexico. Therefore, we decided to stop the fuel supply and the Shop Food and Services area, to which the Bonjour stores belong,” said Farid Benyahia, Director, TotalEnergies Mexico.

Regulation has been a constant issue for private investors in Mexico since the start of the López Obrador administration. Mexico’s shift in energy policy has created uncertainty for foreign investors, which has also fueled a conflict regarding its free trade agreement with Canada and the US. Last year, CRE closed some of TotalEnergies’ gasoline and diesel storage terminals that serve for distribution, which affected its operations. Furthermore, according to Reforma, some gas station inspections by the Federal Consumer Attorney's Office (PROFECO), CRE and the Safety, Energy and Environment Agency (ASEA) have been conducted while relying on abuses of power and intimidation, at times through interventions from the National Guard (GN). While the station operators can ask the GN to leave if they do not have the correct permits to carry out inspections, some operators still report issues.

CRE’s permit approvals stagnated over the past years. In 2016, a total of 679 permits were issued but by 2021, only 114 permits were approved. However, due to pressure from the private sector and foreign investment stakeholders from January to September 2022, CRE released 300 permits to service stations. Fifty percent of the permits were approved this September. In addition, CRE might release around 200 further permits before 2022 ends. According to the National Organization of Petroleum Distributors (ONEXPO), 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.

Nevertheless, TotalEnergies will continue with its other stores, as well as with its upstream activities, as the latter was recently approved by the CNH. CNH had to approve a new budget of US$17.33 million, US$3.2 million more than scheduled, as a result of operational setbacks.