For the first time in 75 years, companies outside Mexico are allowed to invest in the country’s fuels market following deregulation by the Government. The move has seen BP become the first global brand to open a fuel station in the country, with plans for 1,500 to follow in the next five years
When you think of the world’s largest consumer and gasoline markets, Mexico might not automatically come to mind. Yet with a record 1.6 million new vehicles purchased in 2016 - an 18.6% increase in new car sales versus the previous year - Mexico is a serious player in the global automotive sector. This boom is not new or temporary either, as the Mexican car industry has enjoyed two decades of growth, propelling the country to the sixth-largest consumer gasoline and diesel market globally. This growth has been supported by a rising Mexican middle-class containing some five-and-a-half million more people than in 2000, and now accounting for 47% of the 120 million people living in the country.
A thriving industry, coupled with the decision by the Mexican Government to deregulate the fuels market in 2013, makes Mexico an attractive option for foreign investment. It has led to predictions of a boom in oil and gas production in the country, by as much as 76% by 2040, according to the US Energy Information Administration (EIA).
Entering the market
In light of developments, and with more than 50 years’ experience in Mexico, BP opened its first fuel station in the country in early 2017, making it the first global brand to enter the Mexican retail fuels market. Located opposite the iconic Torres de Satélite (Satelite Towers) in the suburban district city of Satélite in Mexico City, the BP fuels site is situated on Periférico, one of Mexico’s main motorway routes connecting the capital with the centre of the country.
Speaking about the move, Richard Harding, vice-president of BP’s Downstream commercial development, says: “We are delighted to be the first international oil company serving Mexican consumers in what is the sixth-largest consumer gasoline and diesel market globally. The energy reform provides a great opportunity for Mexico - it will bring choice and competition to the gasoline market.”
The move brings to an end 75 years of exclusive state-ownership of the Mexican retail fuels market, during which Petroleos Mexicanos (Pemex) was the sole provider of fuel across the country. According to BP Mexico, the first site brings a new experience to the thousands of motorists a day that are visiting the retail station, such as assistants at each fuel pump, fuels with BP’s proprietary ACTIVE technology that helps to protect car engines, and free optional extras, including windscreen washing and tyre pressure checks. In another first, motorists are experiencing the convenience of being able to pay at the pump if they choose, with assistants carrying portable card payment terminals.
The Satélite forecourt is just one of 200 new fuel retail sites planned by BP across Mexico this year. And with up to 1,500 sites planned in the next five years, as many as 50 million motorists could be served BP fuels by 2021.
This growth would see Mexico become one of the main customer bases in BP’s global retail portfolio, which currently contains 18,000 fuel stations in 19 countries. With up to 1,500 BP fuel sites, Mexico would have a similar amount to that in the UK, trailing only the US and Germany in numbers.
In numbers: markets and motorists
The number of new retail sites planned by BP across Mexico in 2017
The number of motorists who could be served by BP in Mexico by 2021
There are 18,000 BP fuel stations in 19 countries across the globe
Growth in retail
BP’s venture into Mexico is an important chapter in BP’s plans to grow its downstream business in new markets. It builds on successful partnerships with retailers across Europe such as Marks and Spencer in the UK and Rewe to Go in Germany.
BP has plans to expand its global portfolio in Indonesia, India and China and has recently announced plans in Australia with Woolworths, one of Australia’s largest supermarkets. The move is subject to regulatory approvals but would see $1.3 billion investment to rebrand and operate Woolworths’ existing 527 fuels and convenience sites across Australia, as well as an additional 16 sites currently under construction.
Rich history with new opportunities
BP’s entry into Mexico’s retail fuels market builds on a long history in the country stretching back for 50 years through its Castrol business. “We believe that access to new markets for BP such as Mexico is a privilege and not a right,” says Harding. "By delivering value to local customers, investing in the local economy, employing local people, as well as delivering great products and services, we will earn the acceptance and loyalty of the Mexican consumer to BP.”
The new chapter will include exploration in the southern Salina basin in the Gulf of Mexico, following successful bids for blocks in a deepwater tender in 2016, and a number of opportunities in wholesale marketing for natural gas, natural gas liquids and power.