Energía Costa Azul is an LNG terminal in Baja California that has been held up by delays in Mexico. Energía Costa Azul is an LNG terminal in Baja California that has been held up by delays in Mexico.

US oil companies charge discrimination in Mexican fuel market

Regulatory actions may violate free trade agreement

United States companies that operate in Mexico’s fuel market are not being treated fairly, says the American Petroleum Institute (API).

In a June 11 letter sent to senior United States officials, API president and CEO Michael Sommers asked the U.S. government to urge Mexico to cease discriminatory practices against U.S. oil companies.

Sommers said the companies are subject to new regulatory actions that undermine the framework that should allow unimpeded energy trade and investment between the United States, Mexico and Canada, countries which are party to the new North American trade pact that will take effect on July 1.

He said that U.S. companies have faced difficulties obtaining approval for new or rebranded gas stations and that some of their existing stations have been shut down for minor or nonexistent infractions. The API chief also said that companies have been subject to new storage capacity requirements and have faced delays or rejections for gasoline and diesel import permits.

In addition, the Energy Regulatory Commission has removed regulations applicable to the state oil company, Pemex, which allows it “to unfairly and opaquely undercut the pricing of foreign competitors, giving the company a significant advantage in downstream pricing,” Sommers wrote.

He charged that Mexico’s actions likely violate its commitments as set out in the investment chapters of the North American Free Trade Agreement, or NAFTA, and its imminent successor, the United States-Mexico-Canada Agreement, or USMCA.

Sommers also said that the actions likely breach Mexico’s commitment to non-discriminatory treatment as set out in the state-owned enterprises and designated monopolies chapter of the USCMA.

In the letter to Secretary of State Mike Pompeo, Commerce Secretary Wilbur Ross, Energy Secretary Dan Brouillette and U.S. Trade Representative Robert Lighthizer, the API president urged  the United States “to use diplomatic channels to engage with the president of Mexico” in order to solve the issues.

Financial Information company S&P Global noted that “the complaints by API members are in line with those by companies in other segments of the energy sector, like electricity generators and developers of pipeline infrastructure, which have voiced similar complaints regarding permits and regulations.”

Mexico’s government has also rankled renewable energy companies by suspending national grid trials they have to complete in order to sell power to the Federal Electricity Commission and publishing a new policy that could prevent the sector’s expansion here.

Renewable energy firms and environmental groups are fighting the decisions in court.

Source: S&P Global (en) 

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