Glencore, Chevron enter Mexico's recently opened fuel market

MEXICO CITY (Reuters) — US energy company Chevron Corp and trading firm Glencore on Thursday announced separate plans to enter Mexico's fuel market, as the long-hidebound sector begins to attract major foreign players.

Glencore expects to start importing fuel for Mexico's domestic market in February 2018 through its own terminal in the southern state of Tabasco, according to Alex Beard, the head of the firm's oil division.

"As soon as we have an opportunity to import through our own infrastructure in Tabasco, we will," Beard said at the inauguration of the first gas station branded under the franchise G500, created from a distribution partnership by Glencore and Corporacion G500, signed in May.

Chevron said in a statement it will import, distribute and sell refined products in partnership with a local gas station network it did not name. The company will shortly open its first gas station in Hermosillo, in northwest Mexico.

In subsequent weeks, Chevron expects to launch outlets in the states of Sonora, Sinaloa, Baja California and Baja California Sur, all of which are in the northwest of the country.

The liberalization of retail prices in Mexico has spurred business opportunities for large refining and trading companies who want to distribute and sell imported fuels.

The entry of big players is a boost for the government as its broad energy sector opening, which carved up state monopolies in oil, gas and electricity, begins to gain momentum.

Still, Mexico's fuel sector is not without its challenges, including widespread theft by violent gangs, often working in collusion with the employees of state-oil company Pemex.

PARTNERSHIP

Glencore said its fuel will ultimately be sold through a large network of 1,400 gas stations operated by Corporacion G500, formed in 2014 by independent station owners in response to Mexico's energy industry reform.

G500 sells around 160,000 bpd of gasoline and diesel in several states of central Mexico through existing Pemex branded gas stations, representing around 12% of the country's service stations.

US refiners, including Valero Energy Corp and Andeavor, formerly known as Tesoro Corp, have also announced plans to participate in Mexico's fuel market. Local mining and infrastructure company Grupo Mexico is building new terminals to discharge independent fuel imports and later distribute it by rail.

Pemex remains the largest importer, distributor and seller of fuels in Mexico.

Reporting by Ana Isabel Martinez, written by Marianna Parraga; Editing by Bernadette Baum and Marguerita Choy

Related News

From the Archive

Comments