Mexican president outlines plan to revert oil 'disaster'

The new Mexican president has introduced his government's plan to upgrade six refineries and construct one new plant in an effort to revert a "disaster."

By Renzo Pipoli
Mexican President Andres Manuel Lopez Obrador (L) and Pemex Director Octavio Romero on Sunday announced plans to help recover the state oil company industry from the "disaster" they found. Photo courtesy of Pemex
Mexican President Andres Manuel Lopez Obrador (L) and Pemex Director Octavio Romero on Sunday announced plans to help recover the state oil company industry from the "disaster" they found. Photo courtesy of Pemex

Dec. 10 (UPI) -- Mexico's new government, led by President Andres Manuel Lopez Obrador, will work to revert a "disaster" found in Mexican refineries, upgrade six plants and build a new one, the new Pemex director Octavio Romero, and Lopez Obrador, said Sunday.

The new Dos Bocas refinery will produce 170,000 barrels of gasoline and 120,000 barrels of ultra low Sulphur diesel daily. This production will be equivalent to 30 percent of all the gasoline currently imported, Romero said during a Sunday event at the site where the plant will be built.


"No more privatization nor dismantling of our installations, nor the displacement of the activities of the workers of our country's energy industry," said Romero, who took over as chief of Pemex at the start of the month, as Lopez Obrador took the presidency following elections this year.


The new upgraded refining capacity, will process 1.86 million barrels of crude oil per day by 2022, and will help Mexico gain "energy sovereignty" while assuring that the government retains key energy assets.

The six existing, to-be-upgraded refineries will process 1.54 million barrels of crude oil daily, according to Pemex.

The new refinery will be built in Dos Bocas, Tabasco -- in the Gulf of Mexico -- and along with the existing, to be revamped and upgraded refineries of Cadereyta, Madero, Minatitlan, Salamanca, Salina Cruz and Tula, the plan for the country is to produce daily about 781,000 barrels of gasoline and 560,000 barrels of diesel once all works are completed.

Lopez Obrador and Romero said that all installations will have "leading technology," adding that this will help assure Mexicans have enough fuel, and at prices that would be "fair."

The new refinery will have 17 units and 93 tanks. Its construction will create 23,000 direct jobs and 112,000 indirect jobs.

Lopez Obrador had hinted previously he wanted to reverse privatization efforts in Mexico under his predecessor Enrique Pena Nieto to prevent the transfer of the country's energy assets, including to foreigners.


Lopez Obrador had said the aim of the reform, which started in 2013, was supposed to increase national production of energy and reduce costs. He said, however, that the official figures show steep production declines since the reform started.

Pemex crude oil production in October was 1.83 million barrels per day, down from 1.87 million in the second quarter and 1.9 million barrels per day in 2017. Back in 2013 it was 2.5 million barrels.

As for gasoline production, a report in Mexican newspaper Jornada from July 29, 2018, noted that Mexican refined fuels production fell during the past six years by nearly 45 percent, and has left only enough to cover 30 percent of the country's needs.

The paper said that gasoline production on average in Mexico was about 425,000 barrels per day in 2013, enough to meet more than half of the domestic demand.

Yet by the second quarter of 2018, gasoline production had dropped to 235,000 barrels per day, so that 70 percent of the country's demand has to be met with imports, mostly from the United States.

Former authorities of Pemex questioned in October in the Mexican Congress about why output had declined so much, said it was because of falling international crude oil prices starting in late 2014. This caused the state oil company's investment budget to be reduced, they said.


El Universal newspaper added in a Monday report that Lopez Obrador also said that he projects Pemex, after needed upgrades, will be producing about 2.4 million barrels of crude oil per day by 2024. Without urgent investment, production is set to decline to 1.5 million barrels daily by next year.

Lopez Obrador has in the past estimated the cost of the new Dos Bocas refinery at about $8 billion.

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