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Mexico Issues Controversial Fuel Import Rules

FreightWaves
·2 min read

Mexican officials issued new regulation over the weekend on the permitting process involved in the importing and exporting of fuels in Mexico.

The Mexican Ministry of Energy (SENER) said it will now offer fuel and hydrocarbon import/export permits for five rather than 20 years. The new permit rule took effect Monday.

The regulation is seen by critics as an attempt to limit the ability of private firms to import and export fuels and hydrocarbons into Mexico, along with boosting support for Mexico's state oil firm, Pemex.

Jorge Canavati, chairman of Global Chamber San Antonio, said the new rule could threaten competition and pricing in the international fuel sector, as well as make it more difficult for foreign investors to make decisions on long-term investments in Mexico's energy sector.

"The new rule is just making life more difficult for the private sector right now; it's creating more bureaucracy," Canavati said in an interview with FreightWaves.

Global Chamber San Antonio is an association promoting international trade and development.

"You get a five-year permit — in five years are you going to extend your contract? Or renegotiate? There's no clear understanding why the Mexican government did this," Canavati said.

In 2019, the U.S. imported over 218 million barrels of Mexico's heavy crude, while exporting more than 1.2 million barrels of refined petroleum products to Mexico (more than 70% of Mexico's domestic gasoline, diesel and jet fuel consumption), according to the Department of Commerce.

Port Houston and the Port of Corpus Christi in South Texas are two of the largest U.S.-produced-crude export ports in the nation.

Canavati said he doesn't think the actual volume of U.S. fuel exports to Mexico will change, but the new regulation could have an effect on fuel prices and availability in the Mexican market.

Mexico's antitrust regulator, the Federal Economic Competition Commission (COFECE), also criticized the new permitting rule and recommended that the government not follow through with it.

Alejandra Palacios, president of COFECE, warned on Dec. 21 that if the new regulations are approved, it would harm free competition in the sale of gasoline to consumers, while making it more expensive to obtain permits to import fuel.

The new fuel regulations were published Sunday in Mexico's government gazette, the main official daily publication of the Mexican government.

"In view of [Mexico's] energy security, the adequate supply of fuels and the country's energy sovereignty, SENER must consider the balance between the supply corresponding to national production and imports, and national demand and exports," it states.

Click for more FreightWaves articles by Noi Mahoney.

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