Experts advise that oil refinery capacity in Mexico be increased
Experts at the upcoming Energy Mexico Forum 2016, are expected to offer the opinion that the nation should not only expand the physical infrastructure required to increase the quantity of oil that is refined domestically, but should also better train its labor in an effort to increase oil refinery capacity in Mexico in a more efficient manner.
There are six oil refineries in Mexico. They are run by the state energy company PEMEX:
- Cadereyta Refinery
- Ciudad Madero Refinery
- Minatitlan Refinery
- Salamanca Refinery
- Salina Cruz Refinery
- Miguel Hidalgo Tula Refinery
More domestic capacity needed
Despite this fact, oil refinery capacity in Mexico is insufficient to meet domestic demand for gasoline. According to Petroleos Mexicanos (PEMEX), at the close of the month of September 2015 the daily demand for fuel for autos and other light vehicles reached seven hundred and eighty-six barrels. Forty-seven percent of these barrels were produced using oil refinery capacity in Mexico, while the remaining fifty three percent of the country’s supply was derived from foreign sources.
The administration that preceded the present Mexican government led by Enrique Peña Nieto, that of Felipe Calderon Hinojosa, included the expansion of oil refinery capacity on its list of things to attend to. In the final month of 2010, his administration announced plans to construct a new refinery in Tula, Hidalgo. The facility was to have the ability to process three hundred thousand barrels of crude daily, and would be built at a cost of US $9 billion. The Tula refinery project was cancelled, however, when the Peña Nieto administration assumed Mexico’s leadership.
With the advent of the current administration’s success in passing Mexican energy reform legislation, the Peña Nieto government made increasing oil refinery capacity in Mexico one of its priorities as well. It was acutely aware of the fact that, although internal demand for gasoline was growing, the refining of gasoline domestically had decreased by 11.1% year over year January to September between the period 2014 and 2015. With the new emphasis of private party participation ushered in by energy reform in Mexico, the Mexican government’s Secretariat of Energy issued a permit to build a new refinery to a consortium of private US and Mexican companies to build six new refineries using totally private funds in June of 2015. These gasoline production facilities will have a total price tag of $6 billion US, and will increase oil refinery capacity in Mexico by approximately three hundred and sixty thousand barrels per day.
Proceed with caution
Some experts, such as Miriam Grunstein, a researcher at the Universidad de Nuevo Laredo, opine that investment in oil refinery capacity in Mexico should be undertaken on the basis of having conducted cost-benefit studies. She contends during the present period of low prices for both crude and its refined product are low, private parties must exercise a certain degree of caution in how they proceed with their investment plans.
While much of the discussion at the Energy Mexico Forum 2016 will undoubtedly focus on physical infrastructure, other experts are expected to address the country’s need to develop more workers that are skilled and able to play a role in making the refining of oil in Mexico a more effective and efficient proposition. Today, Mexican domestic refineries employ five times the manpower than those in the US to process similar amounts of crude.
Those interested in learning more about opportunities for investment in Mexico’s energy sector are invited to speak with the experts at the Tecma Group