Mexico not treating US fuel firms equally: API

US-based participants in Mexico's fuel market face discriminatory treatment from Mexican authorities, including delays in permits and unfair inspections, the American Petroleum Institute (API) said.

That treatment undermines the soon-to-expire North American Free Trade Agreement (NAFTA) and its replacement the US-Mexico-Canada Agreement (USMCA), to take effect on 1 July, the association said in a letter signed by its executive president Michael Sommers addressed to US secretary of state Michael Pompeo; secretary of commerce Wilbur Ross; secretary of energy Dan Brouillette and the US trade representative Robert Lighthizer.

Some recent actions by the government "discriminate against US investors in violation of commitments that Mexico agreed to in both NAFTA and USCMA," Sommers' letter said.

API's members in Mexico have complained that the energy regulatory commission (CRE) "prolongs administrative processes for permits to transfer legal ownership that are by regulation supposed to be granted within 90 days."

Consumer protection watchdog agency (Profeco) has also shut down fuel pumps "for minor or non-existent infractions for pump and hose reliability and for measurement accuracy," at retail fuel stations run by US-based companies, API said.

Some of these inspections were made with the presence of the national guard, API said.

US fuel market participants are also facing a stricter enforcement of the standard fuel quality. Pemex receives waivers for these imports, but fuel importers must meet the tougher specifications for US summer-grade gasoline. The ministry of energy (Sener) has delayed, rejected and restricted gasoline and diesel import permits.

API's members also claimed that US companies will be affected by the upcoming fuel storage policy that requires a minimum of five days' worth of inventories.

Yet, "state-owned Pemex owns and operates most of the certified storage capacity, since some of the other participants in the industry have not been able to construct new storage facilities due to unjustified delays in granting the required permits," API said.

US companies such as Chevron, Costco, ExxonMobil, Marathon Petroleum and more recently Valero entered the Mexican fuel market after the 2014 energy reform, which broke state-owned Pemex's monopoly.

So far, out of the roughly 12,500 retail fuel stations in Mexico, close to 30pc or 4,000 operate under a brand other than Pemex.

Most of this growth stems from the purchase and conversion of existing Pemex retail fuel stations to new brands, for which CRE issues permits.

President Andres Manuel Lopez Obrador supports a policy of returning Pemex to the center of the energy industry and making Mexico self sufficient in its fuel needs.

By Sergio Meana