Retail Fuel Deregulation in Mexico Leads to Early Stage Investment by BP

March 30, 2017 Comments Off on Retail Fuel Deregulation in Mexico Leads to Early Stage Investment by BP

On March 10, 2017, Mexico announced the opening of the first internationally branded retail fuel station in well over 50 years. Prior to 2017, retail fuel sales in Mexico were monopolized by state-owned PEMEX. British oil company BP’s pioneer fuel station is situated north of Mexico City in Satélite. The company plans to “invest in the growing Mexican retail fuel and convenience market” by opening nearly 1,500 sites over the next five years, according to BP in their recent press release.

Since 1938, Mexico’s retail fuel industry has been highly regulated, including pricing. Beginning on January 1, 2017, the Mexican government rolled back its fuel subsidies for retail gas stations. Fuel prices jumped 14-20%, with premium fuel reaching a 20.12% rise. According to Mexican president Enrique Peña Nieto, the price increase was a “responsible measure for the stability of the economy.” After prices rose sharply and quickly, protests erupted across the country and continued through much of January.

This change comes just a few years after legislation was put in place to reform the Mexican energy sector. For decades, all retail fuel stations were branded with state-owned PEMEX fuel. BP is the first international oil company to serve consumers in Mexico “in what is the sixth-largest consumer gasoline and diesel fuel market globally,” according to BP Downstream chief executive officer Tufan Erginbilgic. However, BP has been involved in the Mexican commerce industry for about 50 years, selling its motor oil and lubricant products.

BP plans to open around 200 BP-branded retail sites in Mexico this year including both dealer and company owned-and-operated sites. In addition, more fuel and convenience store brands will likely enter the Mexico market.

Read our previous post on the subject: The Impact of Mexico’s Energy Reforms on Shipping Costs

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