The hydrocarbon market has experienced one of its most critical moments in recent months, with two reforms aimed at modifying the sector’s rules and a recurring political discourse in favor of the state-owned Pemex. But despite constant changes and an apparent environment of uncertainty, some private companies that came to market with the 2013 energy reform have decided that their foray is a long-term strategy.
Fabio Radelli, the leader of ExxonMobil’s fuels division in the country, is one of those who believes that his foray into the Mexican market does not depend on the current political discourse, but on a series of factors that ensure the continuity of his business in the long-term.
“We entered this fuel business with a long-term vision and we did not enter to be here for a short time. Just as we did in lubricants, as well as we did in chemicals, we are here for the long term ”, says Radelli in an interview at the company’s offices, on Reforma avenue. “We see Mexico as a strategic market and when we decided to enter here it was a very clear decision, that this was for the long term (…). We came to stay and grow, we are not going to stay as we are ”.
Radelli, a nuclear physicist by profession and an industry veteran – with nearly 30 years with the company and a career started in France – arrived in May last year to take the position of director of ExxonMobil.
The Italian based in Mexico defines the national market as one still in the process of maturing and with multiple opportunities for the company, not only in the fuel market, but in other divisions such as petrochemicals and lubricants.
Today, just over a year after he assumed his new role, the company has announced the opening of its 500th gas station in the country, which will be located in a state in the center of the Republic of which it did not give further details.
The US giant opened its first station in December 2017, now it already covers 20 states in the country, with a strategy focused on the north and center of the country, and with a still distant vision to reach the south.
Company data places it in third place among private stations in the country. And the latest count by the National Organization of Oil Dealers (Onexpo), as of September last year, places the US company in fifth place, after the state-owned Pemex, BP, Oxxo Gas and G500.
But Radelli, who accepts that the company’s growth is slightly slower than that of its competitors due to the business model, defends the company’s position in the market. And it assures that no other competitor has managed to create a supply strategy like its own, nor supply all its stations with fuel from three of its refineries in the United States: Baytown and Beaumont in Texas, and Baton Rouge, Louisiana.
A strategy that has ensured supply at peak times in the market, such as in January 2019, when the fight against huachicoleo undertaken by the federal government led to a shortage of the product in most of the country, but not in its stations, in that time located only in the Bajío region.
Unlike other companies that entered the Mexican market with a strategy based on the purchase of gasoline from the state-owned Pemex and gradually introducing gasoline that they produce abroad – so far no company, apart from Pemex, produces in Mexico – ExxonMobil started its operations in the country with fuel from the southern United States.
The company’s plan has also been based on bringing together local companies specialized in storage, transportation and distribution to grow its logistics chain in the country.
The American does not own the service stations in the country, but rather focuses on creating supply chains among Mexican businessmen. Many of them worked with the state-owned Pemex until before the market opened with the December 2013 reform.
Exxon imports the fuel from its refineries and transports it – currently it does so by ship and rail with its partner Kansas City Southern – to the storage terminals, where its Mexican partners take care of the rest.
The company works with nine Mexican distributors and imports its gasoline and diesel to six storage terminals, such as the maritime one in Tuxpan. It also supplies fuel to other private companies that have service stations.
But its growth depends on one factor, which is both the success of the brand’s supply chain in the country and the weak point for its expansion: the investment in terminals and other logistics elements are from third parties. “Our growth in the number of service stations depends on the growth of logistics, the plan here is to grow our logistics capacity and when you add a new terminal, then you generate the opportunity to grow the market for stations in the area that the terminal that it can supply, but it’s a much longer process than just branding, ”says Radelli.
