Caps on Pemex in Mexico needed for jet fuel competition, says Cofece

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MEXICO CITY, March 17 (Reuters) – Mexico’s jet fuel market is riddled with barriers to competition and should be reformed to include clear rules that set limits on state-owned Pemex’s dominant position in the sector, the industry watchdog said on Friday. Cofece competition.

National oil company Pemex PEMX.UL has long dominated the country’s oil and gas market, including derivatives such as the production and sale of jet fuel, even after its main monopoly powers ended in favor of a more competitive market with a constitutional reform ten years ago years.

In a statement, Cofece recommended that the country’s energy regulator, CRE, establish a rule that would cap Pemex’s market share in jet fuel storage, which it said hindered competition.

“Most of the country’s (fuel storage) capacity is under contract with Pemex…with no maximum limit to its reserve capacity, which limits the entry of competitors,” the Cofece statement added.

The watchdog also made recommendations regarding sourcing, secondary and internal storage as well as retail marketing. He said current rules governing jet fuel import permits discourage new market entrants, recommending that the energy and economy ministries make changes to encourage more players.

The watchdog added that if its recommendations were implemented, greater competition would mean “better prices for the end consumer”.

Jet fuel, a refined engine oil used to fly airplanes, is a major expense for commercial airlines.

(Reporting by Adriana Barrera; Writing by Sarah Morland; Editing by David Alire Garcia and Will Dunham)

((sarah.morland@thomsonreuters.com;))

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