BP to become fourth outside Mexican fuel retailer

BP is poised to become the fourth outside company to enter Mexico's retail fuel market since the country launched its sweeping energy reforms.

Until recently, Mexico's 12,000 service stations were franchises of state-run Pemex. The energy reform enacted in 2014 revoked the monopoly and encouraged private investment in the upstream and downstream sectors. In January 2016, companies were allowed to open non-Pemex branded stations and fuel imports were allowed beginning in April.

Despite a wave of authorizations, high fuel taxes set by Mexico's finance secretary have prevented private-sector companies from actually importing diesel and gasoline.

In March Gulf Mexico, the Mexican affiliate of Indian conglomerate the Hinduja Group, was the first company to announce it was entering the retail fuel market. The firm eventually hopes to represent abut 25pc of Mexico's 12,000 Pemex-branded stations.

In June, Mexico inaugurated its first three non-Pemex retail fuel stations, run by Mexico's Hidrosina and LaGas. Both say they are still buying their fuel from Pemex and will do so until prices are fully liberalized in January 2018.

It's not yet clear where BP will place its first stations or how many will be opened.

"BP is analysing all investment opportunities in connection with the energy reform," a spokesman told Argus.

Mexico is a net importer of gasoline. In May, Pemex produced 352,600 b/d of gasoline, an 11.1pc decrease from May 2015, and imported 460,000 b/d, up by 24.1pc compared to a year ago.

BP is also a contender for Mexico's much awaited deepwater auction in December, along with 25 other prequalified firms.