Exxon Mobil to Enter Mexican Gas-Station Market

By Anthony Harrup Features Dow Jones Newswires

Exxon Mobil Corp. plans to open its first Mexican service station in the second half of the year, joining the likes of BP PLC in the country's newly opened motor-fuels market.

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Exxon Mobil said Wednesday that its first Mobil-brand station will be located in central Mexico, and that others will follow this year. The company plans to invest $300 million over the next decade in fuels logistics, product inventories and marketing.

"Recent energy reforms present a unique opportunity to help meet the growing demand for reliable fuel supplies and quality service in Mexico, " the Irving, Texas, company said in a release.

Exxon Mobil is the latest oil major to take the plunge into Mexico's 800,000 barrel-a-day gasoline market, which was opened to foreign investment last year. BP launched its first service station in March and expects to have 1,500 in operation after five years.

Until last year, Mexico's gas stations were all franchises of state-oil company Petróleos Mexicanos, which was also the only gasoline and diesel supplier. Under the 2013 overhaul of the country's energy laws, the market is undergoing a makeover.

Companies other than Pemex are allowed to import and distribute fuels, and Pemex is no longer the only brand of service station.

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Local brands such as Oxxo Gas, a chain owned by beverages and retail conglomerate Femsa, are vying for a slice of the market. Regulators recently approved the first gasoline "buyers club" among existing franchisees who find themselves competing on price for the first time.

Retail gasoline and diesel prices are being freed from government control, a process that began in March in some northern border areas and is expected to be completed nationwide by the end of the year.

With only one service station for every 3,000 vehicles, compared with one for every 1,650 in the U.S. and 2,220 in Canada, according to energy officials, Mexico has plenty of room for expansion. Poor quality of service, including pumps that deliver less fuel than they charge for, has been a problem at many stations, and competition is expected to help resolve that.

Exxon Mobil said it plans to use its traveling laboratories to make periodic visits to its stations to analyze fuel quality and make sure pumps work properly and safely.

Exxon Mobil has chemicals and lubricants businesses in Mexico, and last year won a contract to develop reserves in the Gulf of Mexico in a consortium with France's Total SA in the Mexican government's first auction of deep-water areas.

Write to Anthony Harrup at anthony.harrup@wsj.com

(END) Dow Jones Newswires

May 17, 2017 15:58 ET (19:58 GMT)