Pemex is working on the crude oil stream to improve the quality of Group I base oils and has already started the investment plan to offer Group II base oils to the Mexican market by 2017, Loya Ramirez announced. Pemex has no plans to produce Group III.

In addition, he noted, earlier last month Mexico received the long-awaited news that Pemex Refinacion is opening the market for lubricating oils in nearly 10,000 gas stations across the country, as a result of decisions by Mexicos Federal Competition Commission.

Almost three million liters of [lubricant] sales is now open, said Loya Ramirez. This gives both domestic and foreign lubricant producers the opportunity to compete in this channel.

Mexicos economy is dynamic, and the future is promising for the domestic lubricant market, where Loya Ramirez projected annual growth of as much as 4 to 5 percent, thanks to the economic policies of new President Enrique Pena Nieto. Mexico today has a stable economy with controlled inflation.

The automotive industry is one of the countrys most dynamic, contributing 4 percent of national gross domestic product, 20 percent of manufacturing GDP, 23 percent of exports and 600,000 direct jobs, Loya Ramirez said. Nineteen automakers have plants in Mexico, and Mazda, VW, Nissan and Fiat all plan to open new plants in 2013, Honda in 2014 and Audi in 2016.

However, Loya Ramirez cautioned, Mexico relies on vehicle exports – it exported 2.14 million light vehicles in 2011 – so any drop in international markets affects its economy.

Turning to Mexicos lubricant and base oil markets, Loya Ramirez said the finished lubricant market has been very stable in the last five years, with 2.5 percent annual growth. The market is currently estimated to be just under 900,000 metric tons, up from 814,000 tons in 2008.

Mexican brands have 60 percent of the Mexican lubricant market, and global brands have 40 percent, he said. Top players are ExxonMobil (16 percent of the market), Shell (15 percent), Mexicana (14 percent), Roshfrans (10 percent), Raloy (6 percent), Lubral (5 percent), Chevron (4 percent), BP Castrol (3 percent), Total (2 percent), and all others holding the remaining 25 percent.

By product (omitting process oils), he continued, the market is 37 percent passenger car motor oils, 26 percent heavy duty engine oils, 12 percent hydraulic fluids, 8 percent miscellaneous industrial oils, 5 percent each transmission fluids and gear oils, with all other lubricants accounting for the remaining 7 percent of the volume.

Mexican base oil demand has slipped slightly in recent years, Loya Ramirez continued. Some blend plants closed in Mexico, and more finished lubes are imported. He projected 2012 base oil demand at 568,400 metric tons, down from 589,400 tons in 2008. Pemex, which has capacity to make 6,000 barrels per day of Group I base oil, now meets just 35 percent of domestic base oil demand. The remaining demand is met with imports.

More than 91 percent of Mexicos imported base oils come from the United States. Most base oils, Loya Ramirez noted, arrive by truck, mainly from Houston and Brownsville, Texas. However, he projected, more and more base oils will reach Mexican blenders by railroad in coming years.

Raloy Lubricantes is located in Santiago Tianguistenco, Mexico. Other companies launched by Loya Ramirez include plastic bottle blow-molder Poliprocesos, and chemical importer and marketer Diamond Internacional de Mexico.