OREANDA-NEWS. An affiliate of an Indian conglomerate plans to start up Gulf-branded service stations in Mexico this year, positioning itself as the country?s first independent retailer since the country launched comprehensive energy reforms.

The Mexican affiliate of the Hinduja Group, Gulf Mexico, told Argus that it eventually hopes to represent just under 25pc of Mexico's 12,000 service stations that are currently franchises of state-owned oil company Pemex, whose monopoly over the oil sector has been dismantled under the reform.

Under the new laws, independent companies have been able to apply for permits to open non-Pemex stations since 1 January. They will be able to freely import fuel starting 1 April, before full liberalization and market-driven prices begin on 1 January 2018.

But with less than a month to go, Mexico's oil regulator CRE and the energy and finance ministries have yet to present the required regulations for fuel imports, generating industry concerns about the framework for the historic opening.

Pemex, which posted its third money-losing year in a row in 2015, has a reputation for providing poor service at the pump. Mexican service station operators are demanding that Pemex improve its standards and services in anticipation of the new competition, with some threatening to switch providers.

Grupo Cargo, one of a handful of new associations of service station operators created in the wake of the energy reform to collectively purchase fuel, says Pemex remains a sound option but that it will also explore opportunities with new domestic and foreign companies such as Gulf.

"The margins are very limited. The most important thing is look for the most competitive prices," said Fernando Gonzales Pi?a, president of Grupo Cargo, which represents about 300 service stations. "We've already considered a few alternatives, firms that are thinking of moving to Mexico but have not made as much publicity about it."

The retail market in Mexico could also attract US refiners such as Valero and its retail arm CFT, or Sunoco, which acquired the Susser chain of convenience stores in July 2015.

Valero is the parent company of NuStar, which transports naphtha produced at Pemex's Reynosa-Burgos complex in northern Mexico to the Edinburg terminal in Texas via the NuStar Burgos-Valley pipeline system.

Locally, retailers such as Oxxo, owned by US bottler and retailer Coca-Cola Femsa, are also expected to be early movers.

Mexico produced 381,400 b/d of gasoline and 274,700 b/d of diesel in 2015, down by 9.5pc and 4.1pc, respectively, from 2014. In the same period of time, gasoline imports, including MTBE, were up 15.3pc at 427,000 b/d and up 9.3pc for diesel at 145,300.

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