Mexicos state-owned oil company moved recently to end a festering dispute with its partner in a lubricants joint venture, announcing that it has exercised an option to buy the partners stake in Mexicana de Lubricantes S.A.
Pemex Refining stated in a May 16 news release that it was seizing Impulsora Jaliciense S.A.s share of Mexlub in an effort to reverse financial losses. Such action raises the prospect that Pemex will end Mexlubs monopoly on sales of motor oil at the nations gasoline stations.
It is unclear, however, whether the conflict is indeed resolved. News articles have quoted Impulsora officials as denying that a buyout has occurred and have reported that Pemex tried unsuccessfully to replace Mexlubs top officials.
Mexlub, which is based in Guadalajara, was formed in 1993, when Pemex sold a 51 percent stake in its lubricant business to Impulsora, a group of investors. The deal included a clause guaranteeing Mexlub exclusive rights to sell motor oil at Pemex gas stations for the next 20 years. Pemex owns and operates all of Mexicos gas stations – more than 5,200. Those stations sell approximately 9.4 million gallons of motor oil a year, helping Mexlub to rank atop the nations list of lubricant suppliers. Mexlub claims a 27 percent lube market share, with the gasoline stations accounting for one third of its sales.
The exclusive arrangement has been under attack since the late 1990s, when competitors sought to have it voided.Mexico’s Federal Commission on Competition ruled several times that the arrangement violates the nations laws against anti-competitive practices, but courts have blocked any change in the status quo.
Pemex joined the bandwagon of those wanting to allow other motor oil brands to be sold at its stations and began negotiating in February 2002 to change the situation. The oil company said it also wanted to find a way to improve the financial performance of Mexlub, which has been in red ink for most of the past decade.
Last months announcement signaled Pemexs decision that talks have failed and that it was time to take action. The company said it had seized ownership in order to protect its investment in Mexlub, whose financial conditions are critical. It stated that Mexlub has lost 530 million pesos (U.S. $50 million) over the past decade and amassed liabilities of more than 1.2 billion pesos. Pemex said it would negotiate to restructure Mexlubs debt and install new management to make the company profitable. It added that it still had to negotiate with Impulsora to set the price for the buyout.
According to news reports, however, Impulsora issued a statement May 18 denying that a buyout had or would occur. Subsequent news reports cited Pemex as saying that top Mexlub officials, including managing director Octavio Sanchez Mejorada, had been replaced. When the oil company sent representatives to install new management, though, Mexlub security guards reportedly kicked them out.
A Mexlub official told Lube Report Monday that Sanchez Mejorada retains his position, but neither company has responded to repeated requests for comments.