Mexico is looking to the United States and Asian fuel markets to boost gasoline and diesel imports in 2024 and 2025 as it struggles to start up the country’s newest refineries, traders told Reuters.
The Olmeca refinery, also known as Dos Bocas, is a flagship project of outgoing Mexican President Andres Manuel Lopez Obrador, who aims to reduce Mexico’s reliance on fuel imports from the United States.
But the 340,000 barrels per day refinery has suffered multiple delays and budget overruns and is now estimated to require twice the investment originally budgeted for — originally budgeted for $8 billion — and has suffered major cost overruns, costing about $18 billion to date, with no start-up date yet.
Dos Bocas is unlikely to be ready to produce commercial amounts of fuel before the end of this year, five sources familiar with the project told Reuters last month.
Olmeca is set to add about 20 percent to Mexico’s current refining capacity, but Reuters sources said that won’t happen during President Lopez Obrador’s term in office. His successor, President-elect Claudia Sheinbaum, is due to start commercial fuel production at the refinery when she takes office on October 1.
Delays in the start-up of refineries have led traders at state oil company Pemex to ask for more fuel imports than previously planned in 2024 and 2025. A trader at a major commodity trading firm told Reuters that Pemex traders were now asking for roughly the same amount they previously imported.
Despite being the world’s largest oil producer, Mexico will remain a net importer of refined products to meet domestic demand until 2030, the International Energy Agency (IEA) said in its annual report, Oil 2024, which compiles analysis and forecasts through 2030.
“Reports that the Dos Bocas refinery will soon be operational have ebbed and flowed as the project continues to face start-up problems,” the IEA said of the refinery.
The agency expects the refinery to be “operational no earlier than the fourth quarter of 2025, with full-scale operation taking several years.”
Even if Mexico ramps up refinery utilization this decade, it will still need about 300,000 bpd of imported fuel in 2030 to meet demand, compared with more than 700,000 bpd in 2023, the IEA said.
Article by Charles Kennedy of Oilprice.com
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