The process to implement competitive conditions within the energy sector primarily fostered since the so-called energy reform of December 2013 is starting to evidence its first effects regarding the storage and transportation of refined oil products.

Pemex Logística (the logistics productive subsidiary company of Petróleos Mexicanos –the national oil company) is following the Administrative Provisions of General Character ("DACG" for its acronym in Spanish) set forth for open season and the rendering of services for pipeline transportation and storage of oil refined products and petrochemicals. The Energy Regulatory Commission ("CRE" for its acronym in Spanish) published said provisions on Jan. 12, 2016 in the Federal Official Gazette. Consequently, the above referenced available capacity open season has begun.  

The open access is a CRE regulated procedure whose purpose is to auction capacity in a transparent and competitive way for both pipeline transportation services and storage. In that way, the market players will be able to acquire it.

In this sense, complying with the provision set forth in the seventh transitory article of the DAGS, Pemex Logística assigns the available capacity through an agreement in which the right to have a determined reserved capacity is agreed upon by the parties and will be applied to the pipeline transportation systems or storage facilities for oil refined products or petrochemicals. The service modality is set forth through a contractual reserve in which the Pemex Logística is entitled as permit holder to promise said capacity to a user through a service agreement.

The open access procedure was called on the past month of December through the productive subsidiary company after the CRE approval of the proposal and the corresponding terms and conditions. Please note some key characteristic of it:

  1. The storage and pipeline transportation capacity that will be assigned through permits is for gasoline and diesel pipelines and corresponds to the zones of Rosarito (Rosarito, Ensenada and Mexicali storage facilities and the transportation pipeline systems via two flows that connect said terminals); and the Guaymas zone (Hermosillo, Cd. Obregón, Magdalena, Navojoa and Nogales and pipeline transportation systems to the Hermosillo and Cd. Obregón terminals connected from Guaymas).
  2. The capacity that will be assigned via open season to the potential interested parties would be the one that is left from the total capacity minus that one that has been directly assigned to Pemex Transformación Industrial ("Pemex TRI"). It is important to note the capacity assigned to Pemex TRI has been approved by the CRE (Energy Regulatory Commission) (RES/1678/2016 y RES/1679/2016), leaving 25% of storage capacity and a 37% of transportation capacity via pipeline systems.
  3. In agreement with the timeline of price liberalization of gasoline and diesel established by the CRE, the open season in question is the first of two, of which, jointly will comprise the storage terminals and the pipeline systems in the border states of Baja California, Sonora, Chihuahua, Coahuila, Nuevo León and Tamaulipas.
  4. Given the importance of the open season, the CRE, decided to extend the deadlines to participate on it. The new terms are the following: a) Feb.17, 2017 to submit the letters of interest to participate and to prequalify; b) on March 10th, 2017 for the submission of proposals of Pemex Logística; c) March 11th to 14th, 2017 for the auction and evaluation of proposals by Pemex Logística; and d) March 15, 2017 for the assignment of capacity.
  5. The validity of the agreement or contracts celebrated between Pemex Logística and the marketers of Petróleos Mexicanos cannot go beyond the date of Dec. 31st, 2019.

The open season process described above represents a very important step towards the opening of a fully competitive market in particular de pipeline transportation and storage of oil refined products. Indeed, the main goals are: a) participation of new competitors to the market by assigning part of the capacity of the former State monopoly and b) reducing is dominant position. Both objectives are aimed towards fostering the free market of oil refined products and the generation of potential new investments and growth that participants of the market are expecting as a result of the implementation of the energy reform.

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