November 8, 2021 [Argus] – Marathon Petroleum will seek private-sector fuel storage options for its Arco retail brand in Mexico as its three-year leasing agreements with state-owned Pemex — the only ones awarded after initial plans for many such deals — run out this year.

“We still have a very good relationship with Pemex, as we are their clients buying crude from [international arm] PMI for our refineries in the US, and also sellers as we sell them refined products,” Marathon Mexico’s general director Yuri Carreno told Argus at the Onexpo fuel retailing convention in Cancun, Mexico. “It now time to turn the page. We both honored the contracts.”

Marathon will look to the private sector to store and transport its fuels for its network of 273 Arco fuel stations in Mexico, Marathon commercial director Leonardo Giron said.

The company is awaiting the entry into operation of IEnova’s 1mn bl, $150mn Topolobampo, Sinaloa, fuel storage site, that could start in the first quarter of 2022, compared with a previous estimate of the first half of 2021.

Andeavor, later bought by Marathon, had bid successfully to lease 107,613 bl of storage capacity from Pemex in the country’s northern border zone as well as in its Topolobampo-Pacific area in 2018. It also won 1,500 b/d of capacity on a products pipeline from El Paso, Texas, to Juarez, Mexico, and another 1,500 b/d on a bidirectional line between Juarez and Chihuahua, Mexico.

The US company previously secured 315,000 bl of storage space and 9,535 b/d of pipeline capacity in Sonora and Baja California in Pemex’s first tender in May 2017, in a contract that expired last year. Others auctions ended with no winners, and some market participants said the terms were unattractive. The Pemex fuel infrastructure leasing plan created in the wake of the 2014 energy reform under the previous presidential administration ended after President Andres Manuel Lopez Obrador took office in late 2018.

Private-sector fuel storage options have filled the gap, although both storage operators and fuel retailers complain of additional bureaucratic burdens from the government and regulatory shutdowns because of minor violations — some in the name of fuel theft.

But both directors agree with the government’s policies that do effectively combat fuel theft.

“We fight for every cent of discount that we can put on our final prices,” Careeno said. “But at times we see retail prices that are not possible in any way, legally.”

Yet Marathon has grown its retail fuel chain into new territories this year with the opening of 11 stations in Jalisco and two in Nuevo Leon since mid-2020, expanding from its strategic operational area in the Pacific states of Baja California, Sinaloa, Sonora and Chihuahua — south of many of its operations in the western US. It also added technology during the Covid-19 pandemic such as an app that allows for contactless payments through a QR code. It had an initial goal when it started in Mexico of opening 1,000 retail fuel stations by 2025, but now simply plans to open where there are opportunities.

“Our growth certainly fell into a speed trap because of the pandemic, and because well … the world stopped,” Giron said. “But we want to consolidate the business we have in Mexico.”

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