Chunzi Xu and Lucia Kassai, Bloomberg News
EnergiesNet.com 01 11 2024
A new refinery in Mexico is set to cut the country’s gasoline and diesel imports by about a third later this year, hurting the lucrative export business of US companies such as Valero Energy Corp, Exxon Mobil Corp and Marathon Petroleum Corp.
After years of delays and cost overruns, Petroleos Mexicanos’ Olmeca refinery, also known as Dos Bocas, on Mexico’s East Coast will start processing crude in earnest in the second half of 2024, eventually ramping up to cut fuel import needs by 200,000 barrels a day, analysts at Wood MacKenzie Ltd and Rapidan Energy Advisors LLC say.
That’s more conservative than Pemex’s official estimate, but enough to hurt the bottom lines of US refiners, who for years have relied on Mexico as a profitable — and its largest — overseas outlet. As a result, refinery operation rates will drop as margins come down, according to Austin Lin, an analyst at Wood Mackenzie.
That means US refining margins will trend lower this year, near the historical averages of $10-$20 a barrel, after surging to record highs in the $30-$60 range over the last two years, Lin said.
Marathon Petroleum and Exxon Mobil declined to comment and Valero did not respond to a request for comment.
Last year, Mexico imported about 600,000 barrels a day of gasoline and diesel, with around 87% of that coming from the US, according to Kpler data compiled by Bloomberg.
The refinery, which started up in September, will stabilize crude processing in March and ramp up to average 243,000 barrels a day this year, according to a company presentation. It’s unclear when the plant will be producing fuel-grade gasoline and diesel, as delays and hiccups are routine for Pemex refineries. “There will still be a need to buy from the USGC,” said Linda Giesecke, director of refined product at consultancy Rapidan Energy, referring to US Gulf Coast companies.
bloomberg.com 01 10 2024