While lots of folks are watching private branded gas stations open for the first time in Mexico, Pemex officials are carefully watching their very first Pemex branded gas stations in Texas. Five of the iconic Mexican gas stations opened in the Houston Texas area this past December. These were the first to open outside of Mexico in the company’s 80 year history.
The Houston stations sell United States gasoline, and though the attached convenience stores do include a Taco Shack, they also sell all-American style convenience-store-fare too.
Pemex intends these five stations as a market testing venture, primarily. Although they do plan to open more, you can bet a lot of what they’re doing is struggling to learn how to compete in the newly competitive Mexican market.
Private companies are only now opening non-Pemex branded filling stations. The Coca Cola bottling giant announced plans recently to rebrand some 300 Pemex stations under their own OXXO brand. OXXO is a 13,000 strong chain of convenience stores with locations all over Mexico. Gulf Oil also plans to open some 100 filling stations in Mexico before the end of this year.
All this comes in the wake of an 80-year monopoly on all things petroleum in Mexico, and that wake is not pretty. The former pride of Mexican industry is staggering under the weight of pension obligations from a very bulky workforce, and suffering from the collapse in world oil prices.
While Pemex has a run a Houston refinery, in Deer Park, for years, the Houston gas stations won’t be selling their gasoline. Pemex opened in Houston in large because of the population of Hispanics and especially those of Mexican descent. It’s a retail operation, but probably more than that, it’s a market research operation. Still, with hundreds of thousands of Mexican descended people in the US, it could be a retail operation that’s ripe to take off.
Pemex is increasingly encouraging infrastructure investment that is intended to support all those new privately owned and operated stations opening in Mexico. Re-investment and badly needed infrastructure upgrades have suffered as world oil prices tanked out and the oil giant has faced government bailouts and worse.
But all of the reforms necessary to fix the aging petroleum behemoth have taken significant political muscle too. Sweeping energy industry reforms that would be all but impossible today took place between 2012 and 2014. But even despite the current administration’s political woes, progress on the reforms staggers forward – and foreign investment is slowly shoring up the industry. Auctions for exploration and extraction of the country’s oil reserves have met with significant success and similar auctions have opened up the country’s electricity markets to outside, private and foreign investment too.
The Mexican energy market and the technical standards it demands are very much in line with the best in the industry, even despite language and business culture differences. And as the reforms take root, so too, does the new spirit of investment and opportunity.