Page 5 - LatAmOil Week 38 2021

LatAmOil COMMENTARY LatAmOil

This uncertainty appears to have made an Media’s source said last week that the commis-
impression, as one fuel supply director for a sion had never before effected a closure for lack
private sector Mexican company told Argus of documentation.
Media that no one knew what might happen
next. “It has been closed until further notice,” he Anti-corruption pretexts
remarked last week. “You do not know if that is Mexican officials, including President Lopez
an hour, a week, a month or a year.” Obrador, have argued that these measures are
Meanwhile, Mexico’s Reforma newspa- necessary in order to stamp out corruption and
per reported that Monterra had not been the protect consumers.
only party affected by CRE’s actions. It quoted However, industry sources told the Reforma
sources with knowledge of the matter as saying newspaper last week that they were sceptical of
that the commission had attempted to prevent a such assertions. One source asserted that the
ship heading for the Invex terminal in Tuxpan government was working to cultivate suspicion
from unloading its cargo of petroleum products. that private sector firms were connected to the
Those sources said that CRE representatives had illegal distribution and sale of fuel. Mexico City
taken this step on the grounds that the vessel did “wants to return to a gasoline monopoly” that
not have the required permits, but eventually would favour Pemex, he said.
allowed it to proceed. Alejandro Montufar, the CEO of the Petro-
“They put a closed seal on the boat, but that Intelligence consultancy, agreed. “The fewer
boat was adhering to international legislation terminals there are, the less competition there is
and it managed to unload in the end,” one of for Pemex. That’s a fact,” he was quoted as saying
Reforma’s sources said. by Mexico News Daily.
Likewise, Alicia Zazueta, the director of CRE reportedly
Persistent pattern Equipos y Servicios Industriales Generales (E ordered
The incident is concerning, as it represents an Services), described CRE’s actions as discre-
extension of Mexico City’s ongoing efforts to tionary or even arbitrary. The commission’s can- Monterra Energy
give the national oil company (NOC) Pemex cellation of permits awarded to and suspension
every possible advantage over private sector of the operations of facilities owned by private to suspend
operators, even though the legal regime explic- companies indicates that the state is taking steps
itly allows for competition. to restore Pemex’s dominance over Mexican fuel operations at
The NOC lost its long-standing monopoly markets, she told Mexico News Daily. its fuel terminal
over the country’s oil and gas sector following
the adoption of energy reforms in 2013-2014, Gasoline supplies at risk near Tuxpan on
during the administration of former President Meanwhile, the events described above are also
Enrique Peña Nieto. It is technically required worrisome because of the outsize role that Tux- September 13
to leave room for private companies to bid pan plays in Mexico’s domestic fuel markets.
for certain contracts and cannot escape these Currently, the country imports the majority
requirements unless the government amends of the gasoline it consumes. In turn, the lion’s
the constitution to reinstate Pemex’s monopoly. share of its gasoline imports arrives via Tuxpan.
Andres Manuel Lopez Obrador, the suc- As a result, if the port – and the privately owned
cessor to Peña Nieto, has indicated that he is terminals that operate there – cannot operate at
not looking to change the constitution in this its normal pace, Mexico will face a real risk of
way. But he has said repeatedly that he believes running short on gasoline.
Pemex, as a state-owned entity, should domi- Claudio Rodriguez, a partner in the interna-
nate the Mexican oil and gas sector. He has also tional energy practice of the Holland & Knight
instructed his administration – and the relevant law firm, told Mexico News Daily last week that
executive agencies of the Mexican government he saw shortages as a real possibility. The coun-
– to use every possible legal means to give the try has encountered similar problems before,
NOC an edge over private sector operators. on occasions when the government attempted
(Additionally, he has introduced new regula- to crowd the private sector out, he said.
tions that give state officials more leeway to sus- “On the issue of medicines, a shortage was
pend operating permits.) created by cutting private companies’ distri-
These instructions appear to have been effec- bution networks ... [because] the government
tive. They have been followed by reports that didn’t have the capacity to supply the national
independent fuel suppliers are having difficulty market. There is an enormous risk of falling into
completing shipments into Mexico for pro- the same situation with fuel ... [because] Pemex
cedural reasons, such as delays in the issuance doesn’t have the capacity to supply the market,”
of permits and authorisations. Likewise, other he remarked. ™
US-based and private downstream operators
have complained of excessive audits, repeated
customs inspections and other varieties of red
tape.
And now reports on the suspension of oper-
ations at Monterra’s Tuxpan depot indicate
that CRE has developed another procedural
tool – namely, unusually strict adherence to
documentation-related requirements. Argus

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