Mexico’s Energy Secretariat (Sener) is proposing new regulations that would strengthen the role of state-controlled Pemex as the main distributor of refined products by increasing obligations to private importers and reducing the life of their import permits, industry observers said Dec. 17. The proposed new rules and revisions would require importers of refined products to show they have secured contracts with buyers and sellers of their fuels for the same duration of their import contracts. This will limit their ability to operate and compete with Pemex, according to industry observers. Sener claims it is proposing the regulations based on the principles of energy security, energy sovereignty and sustaining a supply/demand balance.
The fuel import regulations now being considered by Mexico’s regulatory oversight agency Conamer were contained in a larger proposal aimed at controlling the imports of nuclear material, according to the official document. But, if approved, the measures would result in many importers, mostly small ones, losing their permits, observers said, reducing competition in Mexico’s fuels market while demand struggles to resume after months of economic stagnation due to the coronavirus pandemic. The new rules would not be retroactive. Under the new rules, an importer would be limited to buying and selling with the counterparties it has reported to Sener, preventing the importer from dealing with other buyers and sellers offering better conditions, said Marcial Diaz Ibarra, president of the Asociación de Regulados del Sector Energético, which represents independent petroleum companies in Mexico. “Your import permit becomes a straitjacket,” he said. Under the new rules, an importer could also lose its permit if it fails to make its planned sales, Diaz said.
“This is more likely today under the current market of lower demand because of the pandemic,” he said. Favoring big players The only companies in the position to comply will be big international players with multi-million dollar investments, said Enrique Hernandez, CEO of Rodequim, a small regional importer, during a Dec. 17 webinar on the issue organized by Oil & Gas Magazine.
Also according to the proposed regulations, importers of ethane, methane, ethylene, and other petrochemical feedstocks will now have to request permits from Sener and provide information about their clients and suppliers as well as the final destinations of the imports. The proposed regulations, which appeared on Conamer’s website in the first week of December, has received over 30 formal complaints from importers and associations, mainly in the petrochemical sector, in the last ten days. “The rules for the import of products, under the set conditions, directly becomes a barrier to competition in the country,” said national business group, Coparmex, in a Dec. 16 complaint letter to Conamer. Mexico imported 887,833 b/d of refined products in October, down from 1.16 million b/d in October 2019, according to data from Sener. Gasoline imports were 484,720 b/d, with Pemex importing 74%, or 358,314 b/d, the data shows. Imports of petrochemical products in October were 28 million tons, down from 45.3 million tons in October 2019, Sener data shows. A Sener spokesperson did not reply to requests for comment.