Pemex to upgrade its six refineries after completing 340,000 bpd new plant construction

Octavio Romero, director of Mexican state oil Pemex, said the company will work in the second half of Mexican President Andres Manuel Lopez Obrad´s term on improving its six refineries after completing during the first half of the six-year period the construction of a new 340,000 barrels-per-day (bpd) refinery with a $10-B investment.

Separately, Lopez Obrador and Mexican Secretary of Energy, Rocio Nahle, participated on July 1 in a ceremony to celebrate the end of construction of the 340,000 bpd Olmeca refinery in Dos Bocas, also in Tabasco.

That July 1 date marked four years since Lopez Obrador´s electoral victory that led to his inauguration as president in December 2018 and exactly three years since the start of construction.

New Dos Bocas refinery

The Mexican Secretary of Energy reported on July 1 in a press release the inauguration of the “first stage in the construction of the Olmeca refinery.”

The head of Mexico´s Energy Secretary, Rocio Nahle, said that the plant was “the promise number 71” of Lopez Obrador before his election.

The refinery will run on 22 to 24 API crude oil that will help it produce 170,000 barrels of gasoline and 120,000 barrels of ultra-low sulfur diesel, she said.

Construction involved 17 plants of chemical processing that include the combined plant, the coker, the diesel hydrotreater, the naphtha hydrotreater, the reformer, the catalytic and alkylation plants, units for the isomerization of butane and pentane and to treat residual gas.

There are also plants to process hydrogen, bitter waters, aminas regeneration, cogeneration and the plant to process water and effluents, she said.

The work completed included also 90 storage tanks of which 56 are vertical to store liquids and 34 spherical for gases, with capacity to store up to 15 MM barrels and also includes the co-generation for the refinery to produce its own electricity with 280 MW capacity.

Pipelines and water channel included

The refinery work included, besides 405,111 tons of steel structure and 1.9 million cubic meters of concrete, 4,109 pieces of mechanical equipment, 72,202 pieces of electronic equipment and 3,270 kilometers of tubes. The budget also covered four cooling towers and a 182-meter tower for exhaust.

The works included a 24-inch natural gas pipeline covering 40 miles from Chiapas to the refinery. Construction also included a 17-mile water channel from the closest river. As many as 35,236 workers “with different specialties in direct form, all of Mexican origin” participated in construction, of which 12% were women, Nahle said.

Directly or indirectly the construction represented the creation of about 230,000 positions in 32 state entities.

According to the Secretary of Energy, the subsidiary PTI of Pemex, which has run this project, “has received to date $10.2 billion, of which $8.9 billion have been investment and other spending and $1.4 B payments of taxes.”

President Lopez Obrador said the plant will help the country´s efforts to produce enough of its own fuel for consumption. Mexico has long needed to import gasoline, which it sources from the U.S., to meet domestic demand.

Texas Deer Park purchase´s timing

Romero said on July 6 that “the transaction was a success that exceeded expectations. Thanks to revenue earned during the first half of the year, the investment was more than recovered.”

Pemex received in January control of Deer Park from Shell. That refinery, with also 340,000 bpd capacity, had operated since 1993 as a 50-50 venture of Shell and Pemex. Pemex agreed in 2021 to pay $600 MM to buy Shell´s controlling participation.

“The most significative aspect of the transaction is that Pemex increased its production,” according to a press release from Pemex.

Emissions improvement

Romero said that there are also preparations for upgrade works in Pemex six refineries, with installation of new coking equipment in two of them.

Romero also stressed the Mexican government investment plans announced in June for as much as $2 B to slash methane emissions in exploration and production.

“So far this year the burning of gas was reduced 44% and its rate of recovery has gone from 92% to 96% with the objective of reaching 98% by the end of this administration,” Pemex said.

Crude oil sales

Despite the increase in Pemex processing needs, crude oil exports remained at about a million barrels per day as Mexican officials opted to have quick access to the revenue from the oil exports.

This occurred “given the high prices in the Mexican mix represent 75% over what was considered in the budget, the resources that are very important to finance the country´s social and economic development,” the Pemex release said.

Romero said “the most important revenue source for Pemex has to do with fuel sales within Mexico so that, because of the Energy Reform, the institution had lost market in the last five years.”

One other area where Pemex has seen success since Romero took over the administration of the Mexican state oil entity is in reduction of gasoline theft.

Pemex was founded in 1938 after Mexican President Lazaro Cardenas expropriated foreign oil assets in Mexican soil.

Pemex owns the Salina Cruz refinery with 169,000 bpd of capacity in Oaxaca state, the Minatitlan refinery in Veracruz with 143,000 bpd, the Salamanca refinery in Guanajuato with 115,000 bpd, the Tula refinery in Hidalgo with 111,000 bpd, the Cadereyta plant in Nuevo Leon state with 107,000 bpd and Madero in Tamaulipas with 95,000 bpd.

By Renzo Pipoli

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