México



Very usefull links



PW
Bookstore





News links

AP

AFP

Aljazeera

Dow Jones

Oil price

Reuters

Bloomberg

Views and News
from
Norway

 

 

 

 

Mexican front runner's candidate's plan to build refineries raises eyebrows

Bloomberg/Susana Gonzalez

New refinery estimated to cost $6 billion to $10 billion. About 75 percent of Mexico's gasoline in January was imported

By Amy Stillman

MEXICO CITY
Petroleumworld 02 28 2018

Industry observers have serious doubts about the Mexican presidential front-runner's plan to build new refineries that could cost $6 billion to $10 billion.

Leftist leader Andres Manual Obrador's proposal comes as the country was forced to import 75 percent of the gasoline it consumed in January while state-owned Petroleos Mexicanos are crippled from a series of natural disasters. Last year, the refineries were operating at less than half of their crude processing capacity, raising the question of the necessity for new plants when the existing ones have the potential to produce much more fuel.

Abel Hibert, economic adviser for Lopez Obrador, told Bloomberg last week that new refineries could cost in the range of $6 billion to $10 billion. Industry analysts point to high costs and political challenges as obstacles to lure investment for a new refinery in Mexico.

“I don't think anybody on earth would want to start a refinery in Mexico,” said Robert Campbell, head of oil-products research at Energy Aspects Ltd. in New York. “Grassroots refineries are extraordinarily expensive and the political uncertainty in Mexico makes that sort of investment impossible. The country does not need new refineries, it needs to have its existing refineries upgraded.”

For now, at least, the state-controlled oil company is on the same page.

Pemex's strategy is to reconfigure existing plants to produce higher-quality gasoline and petroleum products for less investment, according to a Pemex spokesmen who asked not to be identified, citing internal policy.

The plants would likely be operated by Pemex and financed by the state or through public-private partnerships, though sources for the extensive financing required are yet to be defined, according to the opposition party leading in the polls for the upcoming election.

Running Low

Mexico's refineries registered the lowest production in 27 Years

  • Refinery runs

Source: Mexico's SIE

A spokesman for Lopez Obrador didn't respond to a request for comment.

“It's a very high investment in a business with very low margins,” said Alejandra Leon, an analyst at IHS Markit in Mexico City. “It doesn't make much sense economically or politically.”

Pemex's plans to bring in private investment have been slow to materialize, with only a handful of deals for refinery units announced. The firm's annual refining output in 2017 was at its lowest in 27 years. That combined with low oil production helped push the company to a loss of 352.3 billion pesos ($19 billion) for the first quarter, the company's second-worst on record.

“It will be difficult for a greenfield project in Mexico to compete against the U.S., one of the most efficient markets in the world in refining,” said Pablo Medina, vice president at Welligence, a Latin America-focused oil consultancy in Houston. “So far, no one has raised their hand.”

Link to the original article.

 

Story by Lucia Kassai ; With assistance by Adam Williams, and Nacha Cattan from Bloomberg.

bloomberg.com / 02 27 2018

We invite all our readers to share with us
their views and comments about this article.

Write to editor@petroleumworld.com

By using this link, you agree to allow PW
to publish your comments on our letters page.

Any question or suggestions,
please write to: editor@petroleumworld.com

Best Viewed with IE 5.01+ Windows NT 4.0, '95,
'98,ME,XP, Vista, Windows 7,8,10 +/ 800x600 pixels


 

TOP

Contact: editor@petroleumworld.com,

Editor & Publisher:Elio Ohep/Contact Email: editor@petroleumworld.com

CopyRight © 1999-2016, Paul Ohep F. - All Rights Reserved.
Legal Information

PW in Top 100 Energy Sites

CopyRight©1999-2017, Petroleumworld ™  / Elio Ohep - All rights reservedThis site is a public free site and it contains copyrighted material the use of which has not always been specifically authorized by the copyright owner.We are making such material available in our efforts to advance understanding of business, environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have chosen to view the included information for research, information, and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission fromPetroleumworld or the copyright owner of the material.