PEMEX on a self-sufficiency quest by 2023

Petroleos Mexicanos, the Mexican state-owned producer known as Pemex, will reduce daily crude exports next year by more than half to 435,000 barrels before phasing out sales to foreign customers the following year, chief executive officer Octavio Romero said during a press conference in Mexico City on Tuesday.https://imasdk.googleapis.com/js/core/bridge3.493.0_es.html#goog_1196018232×

The ambitious — and some say improbable — endeavor is part of Lopez Obrador’s drive to expand homegrown production of gasoline and diesel that Mexico now mostly buys from U.S. refiners. Like many major oil-producing nations, Mexico lacks the processing capacity to convert its oil bounty into fuels and other end-products.

If fulfilled, Pemex’s pledge will mark the exit from the international oil markets of one of its most prominent players of the past decades. At its peak in 2004, Pemex exported almost 1.9 million barrels a day to refineries from Japan to India, and participated in OPEC meetings as an observer.

Despite the pledge, questions abound over whether the heavily indebted state driller can achieve its goal, and many question the logic of scrapping crude exports that are a significant source of cash for Mexico and Pemex bondholders. The company is shouldering a $113 billion debt load that is larger than that of any other oil explorer in the world.

The skepticism about Pemex’s ability to refine all of its own crude output stems from the company’s poor operating and safety record. Pemex refineries have been operating at a fraction of capacity for half a decade after years of underinvestment and lack of maintenance.

In contrast, U.S. refiners typically operate at more than 90% of capacity; even during the worst of the pandemic-driven collapse in energy demand, American fuel makers were churning away at close to 70%.

The pledge “seems impossible to me because the refineries are not capable of operating at 80%,” said Rosanety Barrios, a former energy ministry official under ex-President Enrique Pena Nieto. Another red flag is Pemex’s plan to go it alone without the expertise of foreign partners “so that if something doesn’t go as expected, there is no cushion.”

Source: El Financiero

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