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Mexico’s president-elect sets out plan for new $8 billion oil refinery

These translations are done via Google Translate

MEXICO CITY (Reuters) – Mexico’s next government plans to build what could be the country’s largest oil refinery, with construction set to begin as soon as next year, President-elect Andres Manuel Lopez Obrador said on Tuesday.

Mexico’s president-elect Andres Manuel Lopez Obrador speaks to the media during a news conference in Mexico City Mexico, August 31, 2018. REUTERS/Edgard Garrido/File Photo

The winner of July’s presidential election is seeking to end Mexico’s massive fuel imports, nearly all of which come from the United States, while boosting domestic refining during the first half of his six-year term.

While his aides have provided some details on the plans, Lopez Obrador himself has mostly spoken in general terms and had not previously provided numbers.

“It will be a refinery that will produce 400,000 barrels per day of gasoline with an approximate cost of $8 billion that we want to build in three years,” Lopez Obrador told a group of business leaders in the northern city of Monterrey, in broadcast comments.

Mexico’s largest refinery at present is the 330,000-barrel-per-day Salina Cruz, owned and operated by state-run oil company Pemex [PEMX.UL] in the southern state of Oaxaca.

It was not clear if Lopez Obrador was referring to the planned refinery’s crude processing capacity or its gasoline production. Two aides did not respond to requests for comment.

Salina Cruz, like Pemex’s other five refineries, has recently been producing far below capacity due to accidents and operational problems, as well as Pemex’s focus on maximizing the value of its oil even if that means refining less domestically.

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Mexico’s refining network can process up to 1.6 million bpd of crude. It has been working this year at around 40 percent.

Rocio Nahle, Lopez Obrador’s pick to be the next energy minister, told Reuters in February that the next government wanted to add crude processing capacity of between 300,000 and 600,000 bpd.

Lopez Obrador has previously said the new refinery will be built in Dos Bocas, Tabasco, along Mexico’s southern Gulf coast.

“The commitment is to produce gasoline in Mexico,” Lopez Obrador said on Tuesday. “We want to produce gasoline because we have the raw material, we have crude oil.”

He added the project launch will happen “in the first days” of his government. He takes office in December.

Mexico produces about 1.84 million bpd of crude, more than 60 percent of which is exported, while it imports over 1 million bpd of refined products, including gasoline and diesel, according to U.S. and Mexican government data.

In July, Pemex’s six domestic refineries produced about 213,000 bpd of gasoline.

Reporting by Adriana Barrera, Ana Isabel Martinez and David Alire Garcia, Editing by Rosalba O’Brien

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