September 27, 2021 [bnbamericas] – Mexico’s largest private sector association CCE is urging the government to reconsider its latest moves to infringe on private participation in the energy sector in an open letter protesting the recent closure of three private hydrocarbons storage facilities.
“CCE expresses its deep concern over the recent closure of private oil storage and transfer terminals in different states of the republic,” wrote the association, which is comprised of seven trade groups representing more than 750,000 businesses.
The letter comes after energy regulator CRE shut down several privately-owned hydrocarbons storage terminals in the last month and a half, closing one in Tuxpan, Veracruz state, another in the state of Puebla and a third in Hermosillo, Sonora.
Investments in the storage terminals, which were in operation, are estimated at US$1.5bn, according to a report by energy news outlet Energía a Debate.
CCE’s letter recognized the need for the government to take steps in shutting down the rampant and dangerous illegal hydrocarbons trade, though there is no reason to believe any of the targeted facilities are involved in that activity.
“These are suspensions on companies that operate entirely within the current legal framework, hindering the importation of gasoline so as to artificially protect [state-owned oil company] Petróleos Mexicanos (Pemex), to the detriment of private investments made in recent years,” continued the letter (available here).
CCE added that by limiting the import of gasoline, the authorities are reducing the supply of fuels that are used for basic activities such as public transport, the distribution of food products and goods, among others, which will drive up fuel costs.
Faced with this scenario, the association called on the government to combat hydrocarbon theft without harming consumers and the business community, while avoiding putting into doubt Mexico’s commitment to free trade agreements, such as the USMCA that it has with the US and Canada.
“Increasing the supply of fuels benefits Mexicans and the national industry as well by promoting competition and creating options for gasoline supply,” said CCE.
SHUT DOWN
On September 13, CRE temporarily closed the Monterra Energy terminal, located in Tuxpan and owned by US investment firm KKR.
International companies including Total, Repsol and Marathon use that facility as part of their supply chain for the service stations they operate in the country.
Of the approximately 12,000 service stations, 30% currently operate with brands other than Pemex. This share had been growing rapidly until 2019, when the administration of President Andrés Manuel López Obrador began to clamp down on private fuel sales.
Tuxpan is the entry point for 80% of the gasoline consumed in Mexico.
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