Stefanie Eschenbacher, Florence Tan and Adriana Barrera, Reuters

MEXICO CITY
EnergiesNet.com 05 22 2024

 Mexican state energy company Pemex started sending 16,300 barrels per day (bpd) of crude oil to its new Olmeca refinery this week, less than 5% of its total capacity, internal data seen by Reuters showed, signaling another delay.

President Andres Manuel Lopez Obrador had built hugely ambitious infrastructure project in his home state Tabasco, describing it as “a dream come true,” with the promise of weaning the country off gasoline and diesel imports, most of which come from the U.S.

With two weeks away from the presidential election, Pemex officials have been keen to show progress with the refinery in Dos Bocas, and that Lopez Obrador’s promises had been kept.

However, the previously unreported data also showed that in August, the refinery is scheduled to receive 170,000 bpd, still half of the feedstock needed for the 340,000-bpd plant.

The volumes, which two sources familiar with the operations confirmed, raise fresh questions over the progress of the roughly $16 billion project, which has been running behind schedule and over budget.

Inaugurated in July 2022, the refinery was then projected to run at half capacity the following July and reach full capacity in 2023. But several deadlines have not been met.

Earlier this month, however, Pemex backtracked again and said it would process only 177,000 bpd this year before ramping up to full capacity in 2025.

The slow start at the new refinery in the southeastern part of the country means Mexico will still have to rely on refined fuel imports.

Mexico will also continue to export its heavy crude oil against earlier expectations that the new refinery would lead to a sharp decline, easing tight supplies globally as major Middle East producers have reduced exports to meet their OPEC+ pledges.

During Pemex’s last quarterly earnings call at the end of April, officials said the refinery would start producing diesel later this month and that gasoline would follow.

Diesel is widely considered easier to produce than gasoline. They did not mention crude oil processing rates or targets.

Pemex also has not publicly disclosed how much crude oil the new refinery has received so far.

The data seen by Reuters was included in a document the refining arm of Pemex sent to the exploration and production arm to allow for planning up until August.

The initial amount sent to the refinery this week was less than 1% of the 1.8 million bpd Pemex currently produces.

EXAGGERATED PROGRESS

It is common for new refineries to start up gradually but the government has been touting its success.

Two sources familiar with the internal data told Reuters that the surprisingly small volume of crude oil the refinery is receiving were for one processing line only, and that it was unclear when the second one would start.

One of the sources added that the government had exaggerated progress ahead of the June 2 election.

Claudia Sheinbaum, the candidate for Lopez Obrador’s National Regeneration Movement (MORENA) party, maintains a strong lead over her main rival in polls.

Pemex and the president’s office did not respond to requests for comment.

Reuters previously revealed that Pemex asked its trading unit in March to cancel up to 436,000 bpd of exports for April because it said it needed these volumes for the domestic refining system. Some of this was meant for the new refinery.

A few days later, sources said Pemex planned to cut another 330,000 bpd for May – although it later reversed the second round of cuts, causing chaos and confusion among international buyers that had been banking on supplies from Mexico.

One buyer of Maya crude oil said the market was surprised when Pemex backtracked on cancellations considering there was such a huge cut a month earlier.

Another source at a refinery said buyers had to take term cargoes for May even though they had bought other grades, like Iraqi Basra crude, to replace supply they expected to be cut.

Mexico’s energy ministry has not yet published monthly updates on how many barrels of crude oil Pemex’s six local refineries have processed in April or May so far.

Until the end of March, the latest for which official numbers are available, the data base shows no allocations at all for the Olmeca refinery.

Reporting by Stefanie Eschenbacher and Adriana Barrera in Mexico City, and Florence Tan in Singapore Editing by Christian Plumb and Marguerita Choy

reuters.com 05 20 2024