Engineering News

Refinery Wish List Overwhelms Pemex
Tuesday, June 10, 2008

Mexican state oil giant Petroleos Mexicanos does not have the resources to carry out all the refining projects it needs, Pemex CEO Jesus Reyes Heroles said Tuesday.

"What's in front of us is the construction of 80 (refinery units) at the same time," said Reyes Heroles.

The units will involve expansion projects at existing refineries as well as new refineries.

Speaking on the sidelines of an energy forum in Congress, he said rigid contracting and administrative laws governing Pemex make it "practically impossible" to meet this goal.

Pemex plans to upgrade three refineries and start building new refineries in the coming years to phase out expensive imports.

Mexico imports 40% of its gasoline due to a lack of domestic refining capacity.

Guillermo Ruiz Gutierrez, a strategic director at Pemex, warned lawmakers on the energy committee of "a growing risk of supply shortfalls" unless Pemex immediately invests in new infrastructure to import and store gasoline and other fuels.

Pemex also plans to expand the Tula, Salamanca and Salina Cruz refineries, and build 600,000 barrels a day of new refining capacity.

An energy reform bill calls for private construction of new refineries under a scheme where they will be paid a fee to process crude oil.

"We need to be able to lean on other firms," said Ruiz.

The Institutional Revolutionary Party, or PRI, has balked at private investment in refining. President Felipe Calderon's National Action Party needs help from the PRI to pass the energy reform.

Reyes Heroles said he is waiting for the PRI to come up with its own proposal, and expressed optimism of reaching a political consensus to approve the reform bill, even if gets revised by parties in Congress.

Source: Dow Jones Newswires

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