The Gas Sector and Pending Issues at Closure

Javier Lozano Cortés

 

Bachelor in Business Administration, with seven years of experience in the oil industry. He collaborated with the Directorate General of Petroleos Mexicanos as advisor to the Executive Coordinator, also participated as Assistant Manager of Dissemination and Promotion of Social Communication, later served as head of the Deputy Manager of Sales North Pemex Refining area, administering the franchise agreements, credit and sale of first-hand for service stations and wholesalers of eight northern states of the Mexican Republic.

 

“At the end of the first 4 months of 2015, there are some outstanding pending issues for the implementation of the Energy Reform in the gas station industry.”

 

As background, on December 20, 2013 came into force the Energy Reform, and on August 11, 2014 secondary laws detached from the reform, where big changes were announced for the sector were published:

 

 

2014         2015                                          2016                   2017                         2018

 

 

 

 

New Policy of Maximum prices to the public

Marketing without Pemex franchise

 

 

Free imports

 

Free public price

 

 

 

The first challenge was filed on January 1st with the entry into force of the new pricing policy of maximum retail for gasoline and diesel, where it was expected to be conditions of competition with the possibility of granting discounts to the public price. However, when the vast majority of gas station owners have not opted for this new possibility, only a few isolated stations and in particular a Monterrey group: Gas W, who has launched a strategy of 10 cents less of the maximum price of $ 13.57 for gasoline magna and $ 14.38 for the premium, where there apparently starts working the strategy, but much remains to be done, so we should wait for the conditions for differentiated prices, but at the time nothing happens.

 

In Petroleos Mexicanos, on March the 22th, the Board of Directors approved the creation of new productive State Subsidiaries enterprises and the new organic statute, which certainly is worth noting that it is the most important restructuring in recent decades in the business. However, this could bring consequently a negative impact in the adaptation of control sections and time control through the implementation of secondary energy reform laws, which in time affect the development of some projects of gas sector; we will have to see if they quickly adapt to changes.

 

On the issue of illicit fuel market, with reference to the illegal taps on pipelines, we can highlight some aspects that have been presented as the shortage in recent months of petrol in various parts of the country and huge losses to the company. For that reason, Pemex announced that now they will only transport in they ducts, only petrol and diesel that is not finished or that is raw; the final mixture is carried out directly in the terminal storage and distribution of Pemex, and finally distributed through the distribution of pipes, obtaining finished product for use only in service stations. It is to be seen whether this measure yields the expected results.

 

On the legislative front, during the month of March, the Senate proposed a new, more stringent law to punish the illegal fuel market and was referred to the Chamber of Deputies, where the latter considered that a more thorough legal analysis is required to find reduce empty and legal inconsistencies, possibly apealable, which have been postponed for review and approval; colloquially, that it has been sent to the freezer. Additionally, derived from the electoral process and the closing of last year´s regular legislative period, for the second quarter of 2015, it is expected to be pending several outstanding legislative arrangements for the implementation of some secondary legislation regulations.

 

The CRE has published rates of use, authorizing payment of the SHCP for the year 2015 so you can begin the pre-registration of temporary permits for dispensing to the public, transport and storage of hydrocarbons, among others. From the month of May through December 2015 they will be receiving requests for pre-registrations according to the schedule issued by the CRE on its website with the approach of the month to make the process according to the station number that corresponds, pending to load the final records.

 

Regarding the ASEA (Security Agency of Energy and Environment) finally took office from March 2 of this year and will be responsible for regulating and supervising industrial safety and environmental protection in the hydrocarbon sector. SENER will transfer the work of regulation, supervision and management of industrial safety as well as the delivery and monitoring of permits for exploration and production of oil, and the granting and monitoring of LP gas operations. Similarly, the CRE and CNH refer matters and powers of regulation, supervision and management of authorizations related to industrial safety in the design and operation of industrial processes, distribution, storage and transportation of oil, oil companies and natural gas, respectively . For its part, SEMARNAT will transfer the powers to grant licenses, permits and authorizations of environmental protection exclusively for the hydrocarbon sector, including the use of land for industrial activity and waste management and downloads. It is noteworthy that it will remain pending the publication of the new guidelines for construction and operation of existing and new service stations, having as deadline for publication December 2015.

 

On the issue of alliances between independent and / or gas station groups, very few have managed to form a synergy needed to search at least, unite product purchase volume under the Pemex franchise until 2016, or to seek new options for import for 2017.

 

 

Finally, in partnership or as independent entrepreneurs, gas station owners will have to focus on efforts to have a new business vision beyond just the sale of gasoline and diesel, seeking to reinvent themselves to stay ahead and have more and better services to generate additional new revenue to cope with the opening of competition.