Shell is moving to sell its retail fuel station business in Mexico to local competitor Iconn by the end of the third quarter, as private-sector oil companies face mounting challenges to expand in Mexico.
Iconn Mexico — owner of 7-Eleven and Petro-7 fuel stations in Mexico — is in the process of acquiring Shell Mobility, the company's retail unit in Mexico, according to an internal memo seen by Argus. Iconn expects to receive regulatory approval by the third quarter, the memo said.
"This acquisition represents a strategic opportunity to strengthen Iconn's market position in our mission to continue making our customers' lives easier," Iconn chief executive and board president Luis Chapa said in the memo. "Until the approval and transaction process is completed, both companies will continue to operate independently and remain competitors."
Iconn and Shell did not respond to requests for comment.
There are currently 217 fuel stations in Mexico operating under the Shell flag, while 285 carry the Petro-7 or 7-Eleven brand, according to market sources. Most of the Shell-branded stations are franchised and not directly owned by Shell. Additionally, Shell still holds one of the few valid fuel import permits issued by the energy ministry.
Shell entered the market in September 2017 following the liberalization of fuel prices and regulatory changes from the 2013–2014 energy reform. But the recent rollback of that reform — aimed at strengthening state-owned Pemex — has limited growth opportunities for private-sector competitors, according to market sources.
Private firms entered the market to compete with Pemex's longstanding monopoly by offering alternative branding and supply to some of Mexico's 13,800 retail fuel stations. Major oil companies also planned to import fuel and build storage terminals to improve cost efficiency.
But under the administration of former-president Andres Manuel Lopez Obrador, fuel import permits became nearly impossible to obtain, while inspections of private storage terminals grew more frequent and restrictive, further hindering their progress.
The new energy reform, recently passed, could tighten the environment even more. Market sources said it is still unclear how the new energy regulator CNE will issue permits, while Pemex may now operate without antitrust restrictions related to monopolistic practices.
Iconn already buys fuel wholesale from Pemex, making the acquisition of Shell's operations more viable as it could continue expanding while securing product supply from the state firm, according to market sources.
As of 31 March, 7,286 gas stations in Mexico operated under the Pemex franchise — up by 0.5pc from a year earlier — according to Pemex data.
