BP plans entry into Mexico’s once-closed retail gasoline market

March 9, 2017
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Motorists will be able to fill up their gas tanks at about 1,500 new BP service stations the oil major plans to open across Mexico over the next five years, company executives said on Thursday.

The entry of Britain’s BP into Mexico’s fuel market, which by law was closed for decades to all firms except national oil company Pemex, marks the first time an international oil major has sought a foothold in Mexico’s newly liberalized fuel sector.

BP operates around 18,000 gas stations scattered across some 20 countries.

“We’ve positioned ourselves as a leading fuel retailer in all of those markets,” Richard Harding, a vice president with BP’s downstream unit, said at a ceremony in Mexico City.

“Going forward, Mexico will be no exception.”

There are about 11,400 gas stations in Mexico. BP said in a statement that it planned to open around 200 gas stations in 2017.

The new BP stations will charge “market prices” for the fuel, company executives said, and given a gradual phase-out of government-set fuel prices, the company plans to stand out from its competitors with superior service, not lower prices.

The announcement was attended by Mexican Energy Minister Pedro Joaquin Coldwell, himself the owner of several Pemex gas stations he inherited. He welcomed the new choices being made available to drivers in Mexico, which he described as the world’s fourth biggest gasoline market. A four-year-old energy reform ended the monopoly Pemex enjoyed in everything from crude production to retail sales.

Alvaro Granada, the head of BP Mexico’s downstream division, said the five-year plan to open 1,500 stations will be powered by an investment totaling “several hundreds of millions of dollars,” both for the individual stations as well as spending on terminals and pipelines.

Granada said the 1,500 BP-branded gas stations will be a mix of newly constructed units and former franchises of Pemex, though he declined to be more specific.

The first BP station, converted from a former Pemex station, opened earlier this week in the middle-class residential neighborhood of Satelite, just north of Mexico City.

BP will purchase wholesale gasoline from Pemex, but will mix in its own proprietary additives at Pemex’s main Mexico City terminal.

While Pemex franchises continue to dominate the retail fuel sector, several other companies have announced plans to enter, including Femsa’s Oxxo chain of convenience stores as well as Gulf Oil.

(Reporting by David Alire Garcia; editing by Grant McCool)

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