REFINING, STORAGE & RETAIL

Mexico’s new administration had one clear energy mandate from Day 1: revitalize the country’s existing refineries, which are at 40 percent of their operational capacity, on average. President López Obrador and his energy team led by Rocío Nahle, will invest MX$49 billion (US$2.7 billion) to modernize the existing refinery network so they can reach full operational capacity by 2020 (refining 1.6 million b/d). López Obrador and his team also want to build a new refinery in Paraiso, Tabasco, with a three-year MX160 billion investment, to decrease the country’s dependency on fuels and derivatives imports. Regarding storage, Mexico is moving forward, as, until 1H18, CRE had approved 24 new storage projects and is revising another nine; some private companies and state governments, particularly Port Administration Offices (APIs), have launched tenders to build another 20 projects; and PEMEX is working to revamp its existing terminals, and even build new ones, through open seasons. These efforts have one strategic goal according to CRE: enhance Mexico’s fuels reserves up to five years, which is still low but it is a good start. Finally, Mexico’s retail sector has experienced accelerated growth since the fuel market liberalization. The country has over 45 new retail brands which operate around 24 percent of the exiting retail service stations (11,992 as of 1H18). One of the key purposes of this open market is to create better economic and service conditions for final users (improve fuel demand-supply conditions) and to decrease the number of inhabitants per service station per capita, which as of 1H18 stood at 10,560, according to CRE’s figures. These three sectors are experiencing exciting times and it is a sure thing that investment will keep coming, it is a matter of securing it and having clear timelines to achieve political and market goals on time.