Page 4 - LatAmOil Week 50 2019

LatAmOil COMMENTARY LatAmOil
Pemex filling station in Sonora (Photo: Emerging Territories)
Changes in Mexico’s fuel markets
The CRE has pushed Pemex’s deadline for compliance with new diesel specifications back five years and has also lifted constraints on wholesale motor fuel prices
WHAT:
The country’s main energy regulator is eager to overturn policies enacted during the previous presidential administration.
WHY:
The shift is likely to benefit Pemex more than its competitors.
WHAT NEXT:
US producers of ULSD are likely to be disappointed, since Mexican demand is not rising yet.
MEXICO’S Energy Regulatory Commission (CRE) has once again extended Pemex’s exemp- tion from compliance with a rule mandating the production, distribution and sale of ultra-low- sulphur diesel (ULSD) fuel across the country.
According to Reuters, members of the commission voted unanimously in favour of the extension, which will give the national oil company (NOC) another five years to phase in higher-quality fuel. They did the same last year, when Pemex’s last request for a deferral came up for discussion.
After the vote, the CRE issued a resolution authorising Pemex to continue selling ULSD in only a few parts of the country – namely, near the northern border with the US and in the country’s three largest cities of Monterey, Gua- dalajara and Mexico City – until December 31, 2024. In all other areas, the national oil company (NOC) will be able to offer other types of diesel with higher sulphur content, the resolution said.
Deputy Energy Minister Miguel Maciel wrote in a letter submitted to CRE last week that the government was asking for the extension
because Pemex would not be able to complete the technical and operational tasks needed to support nationwide ULSD distribution before late 2024.
In the letter, Maciel noted that the mandate to introduce higher-quality diesel had come into force in 2016, under the administration of for- mer President Enrique Pena Nieto.
At that time, he said, Mexico was not in a position to start turning out ULSD or distrib- uting it across the country because it faced lim- itations in the areas of storage and production. “As it did not have the required infrastructure for producing ULSD, [Pemex] was unable to immediately comply,” he was quoted as saying by Reuters.
Timing
Initially, Pemex had hoped to be able to comply with the new diesel mandate for cars by the end of 2018 and then complete the switch to ULSD for trucks and buses by 2021.
But it quickly ran into trouble, owing to a lack
of supplies. 
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w w w . N E W S B A S E . c o m Week 50 19•December•2019