At least some lubricant manufacturers in Mexico were said to be scrambling with disruptions in base oil deliveries after the nation’s president imposed new paperwork requirements for imports of petroleum products and chemicals.
President Andres Manuel Lopez Obrador decreed the new system Monday, the latest step in the government’s fight to curb the expanding illicit fuels market. The Ministry of Energy already issued licenses for the import of petroleum products and petrochemicals.
The decree by Lopez Obrador mandates that license holders also present the ministry’s Undersecretary of Hydrocarbons with a new document, an application demonstrating that the volume of material being transported is necessary for production of the manufactured product that is its stated purpose, and that the imported material will be used in a legal way.
Gasoline and diesel are exempt from the new requirement. The decree states that the new applications will be required beginning a month after the decree’s effective date of Oct. 24. As of Wednesday night, the application was not yet appear in the federal government’s website for permits, licenses and other forms.
A market source told Lube Report Wednesday of interruptions in base oil deliveries from the United States already occurring and of Mexican lubricant producers scrambling to obtain the applications.
The United States-based Independent Lubricant Manufacturers Association distributed a statement Wednesday expressing concern about the impact to member companies transporting base oils or lubricants from the U.S. to Mexico.
“The Association is contemplating contacting the U.S. Trade Representative’s office and the Mexican embassy in Washington, D.C., to voice our concerns,” the emailed statement said. It also asked members experiencing problems to report them to the association.
Mexico is one of numerous nations around the world that struggle with high levels of smuggling or illicit trade of fuels. Perpetrators often intentionally mislabel fuel as base oils or import base oil labeled as base oil but then use it as fuel, sometimes after blending with fuel. In doing so they avoid import duties or other taxes because base oils are taxed at lower rates than fuels.
Mexico’s government claims that 15% of the road fuels consumed last year were smuggled or illicitly traded.
Mexico has one base oil plant, at the Petroleos Mexicanos fuels refinery in Salamanca, but it has experienced frequent operational problems, forcing domestic lubricant producers to import most of their base oil.