Glencore in $200m joint venture to supply fuel stations in Mexico
GLENCORE is entering the fuel station business in Mexico with a 15-year supply deal and a $200 million (R2.6bn) investment in a joint venture with local owners, according to people familiar with the decision.
The agreement is the first significant move for Glencore in the retail fuel sector.
It comes as commodities traders, including Vitol and Trafigura, have pushed into the business globally, with hundreds of stations from Latin America to Africa serving as outlets for the products they trade.
Glencore will supply 180 000 barrels a day of gasoline and diesel to 1 400 stations, about 10 percent of the country’s total, the people said, asking not to be named, because the deal has not been announced.
The move comes after Mexico ended a long-standing monopoly by its state-controlled energy company, and last month boosted gasoline prices to aid distributors.
Glencore also plans to spend $200m over the next two years to create a new franchise brand in a joint-venture with G500 Grupo Gasolinero, a local alliance of stations, the people said. Additionally, the trader will invest in terminals and storage.
State-owned brand
Currently, the local group sells its products under the brand of state-owned Petroleos Mexicanos (Pemex).
Glencore declined to comment.
BP last week said it would develop as many as 1 500 gasoline stations in Mexico through 2022, deepening its commitment to become a major new player in the country’s energy revival.
The announcement by the London-based producer came three months after its winning bid for two offshore exploration blocks in a partnership with Statoil and Total.
Mexico, facing its highest inflation rate in almost seven years, has pledged to phase out fuel subsidies over the course of the year.
Glencore will supply 180 000 barrels a day of gasoline and diesel to 1 400 stations, about 10 percent of the country’s total.
The so-called “gasolinazo”, or fuel-price slam, sparked protests across the country that curtailed fuel distribution and sent the approval rating of President Enrique Peña Nieto to an all-time low.
Commodities traders have built large networks of fuel stations through acquisitions and organic growth to help offset declining margins in their bread-and-butter business of buying and selling commodities.
Vitol earlier this month announced it was leading a venture that will pay almost $1.5 billion (R19.7bn) for the largest network of fuel stations in Turkey.