OREANDA-NEWS. November 28, 2016. Mexico state-run Pemex will offer companies access to its oil pipelines and storage terminals in a series of open seasons that kicks off in February 2017.

According to the terms approved yesterday by Mexico's Energy Regulatory Commission (CRE), the competitive open seasons will take place regionally between 1 February and 30 April 2017. The process will start with installations near the northern Mexican border with the US, a region that is first in line to free up fuel prices in a gradual liberalization scheme.

Retail prices at the northern border are already detached from the rest of the country, to reduce a differential with cheaper US fuel.

Pemex's logistics unit plans to offer about 267,000 b/d of pipeline capacity and 959,000 bl of storage capacity, CRE said yesterday.

The first 1-15 February open season includes the storage terminals of Rosarito, Mexicali and Ensenada, linked to the Rosarito pipeline system in Baja California state; and the Nogales, Magdalena, Hermosillo, Guaymas, Ciudad Obreg?n and Navojoa storage terminals linked to the Guaymas pipeline system in Sonora state.

The second 15-30 April open season will be for the Ciudad Juarez, Chihuahua, Parral, Gomez Palacio, Sabinas, Monclova, Saltillo, Nuevo Laredo, Santa Catarina, Cadereyta, Ciudad Mante, Reynosa, Ciudad Victoria and Madero storage terminals, connected to Pemex's northern pipeline system, across the border states of Chihuahua, Coahuila, Nuevo Leon and Tamaulipas.

Pemex Logistics will soon release prices and technical, operational and financial information through an online platform.

The long-awaited midstream opening, part of Mexico?s wider energy reform enacted in 2014, will help to consolidate the participation of new private-sector fuel suppliers and retailers.

"The retail fuel associations [formed after the reform to collectively purchase fuel] are ready. But we're waiting for Pemex and the energy and finance ministries to get the rules out," Luis Fitzmaurice, president of the Chihuahua branch of Mexican fuel distributors association Onexpo, told Argus.

Pemex lost its monopoly under the energy reform, and faces midstream competition from US companies such as Howard Partners and T&R terminals that plan midstream infrastructure to expand Mexican access to US Gulf coast products supply.

In the contrast to the early launch of upstream tenders, the Mexican government has been cautious downstream, wary of the political impact of an open fuel market.

The risks lie in the potential for price spikes, unpopular with voters, and the loss of control over fuel tax income at a time of severe fiscal pressure following the 2014 oil price collapse. Fuel tax revenue is expected to generate 284bn pesos (\\$15.3bn) next year alone.

The finance ministry won its case in congress this month for a gradual and regional liberalization of prices, rather than an abrupt across-the-board freeing up of the market, maintaining some control over prices until the end of 2018. This gradual approach was not foreseen in the legislation that embodied the energy reform.

Although many companies have been authorized to import gasoline and diesel since April 2016, none have actually started because of the fuel tax, known as the IEPS, which they say undermines the economics compared with fuel purchased from Pemex.

In Mexico, the retail gasoline price averaged 14.4 pesos (\\$0.69) per liter in October, according to Pemex?s latest monthly data, up 3pc compared to a year ago.