• Trading house, Puma subsidiary granted 60% of gasoline permits
  • Companies need additional approvals to sell or distribute fuel

Trafigura Beheer BV and oil subsidiary Puma Energy Group Pte are gearing up to become Mexico’s biggest private fuel importers as competition arrives to the formerly state-controlled energy market.

The Amsterdam-based commodity trader and Singapore-based Puma have been granted import permits for 60 percent of the gasoline and 53 percent of the diesel authorized to enter the country since April 1, when Mexico began allowing private companies to import fuel. Previously, only state-owned oil producer Petroleos Mexicanos, or Pemex, was allowed to import fuel.

The opening of Mexico’s fuel market offers investment opportunities for trading houses, U.S. Gulf Coast refiners and local companies formerly unable to take advantage of the country’s growing energy demand.

“Mexico is one of the largest oil-product importers in Latin America and obviously this is the sort of place a trading house will look to get a position in,” Robert Campbell, head of oil products research for Energy Aspects Ltd, said by phone. “Trafigura has a pretty big presence in Central America through their affiliate Puma so I would think that they will look to leverage this position to expand their marketing network and develop their business in Mexico.”

Trafigura and Puma -- which is 48.7 percent owned by the Dutch trading house -- have been awarded 1-year permissions to import a combined 17.8 billion liters of gasoline (112 million barrels) and 9.2 billion liters of diesel (57.9 million barrels). By comparison, Pemex imported more than 150 million barrels of gasoline and 50 million barrels of diesel last year, according to energy ministry data.

Preliminary Permits

Trafigura and Puma are not yet allowed to sell or distribute fuel in Mexico, as additional permits must be obtained from the Energy Regulatory Commission to commercialize the product. The companies must also reach an agreement to use Pemex’s existing infrastructure to distribute within the country, said Rosanety Barrios, head of the energy ministry’s Industrial Transformation Policies Unit. Pemex is expected to allow private companies to use its infrastructure for fuel transportation in the upcoming months, she said.

“If Puma Energy is requesting to import gigantic volumes, at this point it is just a preliminary permit,” Barrios said in a phone interview from Mexico City. It is “brutally optimistic” to think that the companies will be able to transport such a large amount of fuel within Mexico in a year’s time, she said.

A spokeswoman for Trafigura declined to comment in an e-mail.

Commodity trader Koch Supply & Trading LP was also granted permits to import 2.7 billion liters of gasoline (17 million barrels) and 1.6 billion liters of diesel (10 million barrels). U.S. rail company Kansas City Southern and Mexican mining firm Cobre del Mayo SA de CV also received fuel import permits.

Enormous Potential

As Mexico’s fuel market opens, Southern U.S. refineries could “cut out the middleman” by selling fuel in Mexico themselves instead of through PMI, Pemex’s trading arm, Energy Aspects’s Campbell said. The government is seeking to phase out fuel price subsidies by 2018 that in the past have resulted in losses for Pemex.

“There is enormous potential for development of the [oil-products] retail sector, which for a long time was held back by the fact that Pemex was the only company in the market,” he said.

The first volumes will likely move by truck to retail stations on the U.S. border since Pemex hasn’t yet allocated space on its logistics systems and companies haven’t built out their own infrastructure, said Andrew Shepard, refining and oil products market research analyst at Wood MacKenzie. Companies are hesitant to enter the Mexican market before fuel prices are fully liberalized in 2018, Shepard said in an e-mailed response to questions.

“It may take time for the effects to be felt, but there’s a lot of interest in Mexico’s fuel sector, and that means investment, competition and eventually a more efficient system,” said Shepard.

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