PEMEX is falling short of AMLO’s ambitious refining targets

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Motor fuel production from Mexico’s state-owned oil company Pemex dipped last month, company data showed, falling short of ambitious government refining targets meant to wean the country off its long-standing dependence on foreign supplies.

The inability to significantly grow its gasoline and diesel volumes marks a fresh setback for President Andres Manuel Lopez Obrador, who over five years in office has prioritized domestic production, arguing that the country’s energy sector must be self-sufficient.

In May, crude processing at Pemex’s six domestic refineries fell 4% compared to the same month last year. During the month, the state-run facilities only processed about 759,000 barrels per day (bpd), or less than half their 1.6 million bpd capacity.

The monthly figure was Pemex’s lowest level of oil refining since last June, according to figures published Monday.

Pemex did not respond to a request for comment on the data.

Most troubling, according to analysts, is the growing production of highly-contaminating fuel oil, which has seen Pemex’s global market sharply reduced in recent years due to environmental concerns but is nonetheless burned to generate electricity at major local power plants.

At nearly 274,000 bpd, fuel oil volumes eclipsed gasoline and diesel output, which during the month reached about 262,000 bpd and 126,000 bpd, respectively.

Lopez Obrador, a leftist resource nationalist, has said he wants Pemex to process at least 1 million bpd of crude oil while slashing fuel imports mostly from U.S.-based refiners.

When he ran for president in 2018, he pledged to end the imports altogether by 2024, a goal seen by analysts as impossible to achieve in his final year in office.

The company has blamed the previous administration for failing to upgrade the country’s aging, local refineries. Half of them are unable to efficiently process Mexico’s increasingly heavy crude oil output because they lack coking units that can squeeze higher-value gasoline and diesel out of the heavy crude.

The government has pinned its hopes for a rebound on a seventh domestic refinery, the Olmeca facility, which when completed will be Pemex’s biggest. Located just off the Gulf Coast port of Dos Bocas, Olmeca is billions of dollars over budget and has yet to produce its first gasoline.

Lopez Obrador also boosted Pemex’s refining capacity by fully acquiring the Houston-based Deer Park refinery in 2021, but officials have acknowledged that most of its refined products are purchased by U.S. buyers rather than helping meet demand from Mexican motorists.

Source: El Financiero

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