Guatemala smuggling feeds Chiapas fuel market

Fuel smuggled from Guatemala meets as much as 20pc of demand in Mexico's southern Chiapas state, the Chiapas gasoline distributors' association said.

"Illicit sales are a problem for the Chiapas market," Chiapas gasoline distributors association president Emerit Aguilar told Argus. "The absence of rule of law is an issue here and consumers face the cost."

The states' isolated market — mainly supplied by the 330,000 b/d Salina Cruz refinery — sometimes has slightly lower prices than the most expensive central area of the country. But fuels from Guatemala are even slightly less expensive and readily available thanks to Mexico's porous southern border.

Guatemala's average price for regular gasoline is typically lower than Mexico's, at an equivalent of Ps16.59/l ($3.29/USG) on 5 August, according to Guatemala's energy and mines ministry. Prices in Chiapas' capital of Tuxtla Gutierrez ranged from Ps18-21/l today, according to the energy regulatory commission's (CRE) database.

Aguilar said that fuels consumption in Chiapas is steady every year and hovers at 5.5mn l/d of both gasoline and diesel — of which 3.5mn l/d serves the Tuxtla Gutierrez area, 1.2mn l/d for the southern Tapachula area and nearly 800,000 l/d to the state's northern region. But the illicit commercialization of fuels accounts for as much as 20pc of the state's total sales, Aguilar told Argus.

Aguilar's estimates for regional demand are significantly higher than state oil company Pemex's 3.3mn l/d of gasoline and diesel sold from its two main wholesale distribution terminals in the area. Pemex sold 2.4mn l/d of fuel from Tuxtla Gutierrez and 784,000 l/d from Tapachula in May, similar to average volumes for all 2018.

Aguilar said most of the illegally sold fuel is smuggled from Guatemala but he also said a portion comes from domestic fuel theft.

Mexico's national gasoline distributors association Onexpo agreed with the figures from the local Chiapas distributor association.

"We hope that authorities continue taking action and hope to see results," the association said. "The issue affects gasoline stations, the consumer, the finance ministry by not taxing illicit fuel, and it creates distortion."

Neither Pemex, Mexico's armed forces nor the energy ministry responded to requests for comment.

The Chiapas distributors association said it particularly began feeling the effects of smuggled gasoline in February, around the time President Andres Manuel Lopez Obrador began a crackdown on fuel theft.

Chiapas' Tuxtla Gutierrez's 75,000 bl storage and distribution terminal and two terminals in Tapachula — one of 51,000 bl and another of 15,000 bl — are the lifeline of the Chiapas' legal fuel supply. A portion of Tabasco state's 237,000 bl Villahermosa TAR also caters to the northern region of the state.

But the Salina Cruz refinery that feeds Chiapas' three storage and distribution terminals (TAR) has been operating at nearly half its capacity for at least five years.

Aguilar also said that fuel stations which are 120km away from either Tuxtla Gutierrez or Tapachula need to supply themselves from either the Salina Cruz or Minatitlan refineries directly via tanker trucks because Pemex cannot deliver a steady supply during the high demand months of February, March and November.

Chiapas' fuel market is dominated by Pemex-branded stations despite the 2014 energy reform that freed up access for new retailers. BP and Repsol are the only foreign gas brands in the state. The newer brands are primarily located in and around the Tuxtla Gutierrez and Tapachula areas and are solely supplied by Pemex's storage terminals.

Of Chiapas' 274 station permits awarded by energy regulator CRE, only 33pc are in the state's largest metropolitan areas — 61 are in Tuxtla Gutierrez municipality and 28 are in Tapachula — which is the largest municipality closest to the Guatemalan border.