López Obrador again postpones the start of operation of the refinery in Dos Bocas

Originally, the refinery of the state oil company, Petróleos Mexicanos (Pemex), was going to start operating in 2021. This Monday, President Andrés Manuel López Obrador postponed, again, the start-up date of the plant and said that it will be until November. First, it will start operating at half its capacity and then, between December and January of next year, it must be fully operational. The refinery business is far from satisfying the desire of the president, who seeks energy self-sufficiency.

“There is no case in the world in which a refinery with these capacities has been built in such a short time,” López Obrador said Tuesday during his morning press conference. “The works always exceed the government deadlines, but we are concluding this work in five years, less than five years, four and a half years, and it is a great work,” he added. Since his six-year term ends at the end of 2024, the president emphasized that his successor will have to “continue to see” this project.

“They have moved the dates many times and in this sense the federal government, the Ministry of Energy, have lost credibility,” said Diego Díaz, an analyst specializing in energy at the Mexican Institute for Competitiveness (IMCO). “Precisely due to the poor planning of the project from the beginning, which has also been reflected in significant cost overruns, there is a lack of clarity about when the refinery would start operating.”

Olmeca is expected to have a total capacity of 340,000 barrels per day for processing crude oil, between gasoline and diesel, so even when it operates at full capacity, it will not solve the gap in imports. Mexico imports approximately 400,000 to 450,000 barrels per day of gasoline alone. Since the Federal Government gave a transfer of 6,000 million pesos to Pemex between January and March of this year, to build the refinery located in Dos Bocas, Tabasco, Díaz says that he does not expect it to start operations, even at half capacity, for november. “It seems very hasty to me that just a few months later it is going to really start operating,” says Díaz.

The crude oil refining business, also known as downstream, has been one of the least efficient of the State company. An IMCO analysis shows that, in 2022, the losses from this activity exceeded 7,000 million dollars. Between January and June of this year, the losses totaled 3,000 million pesos.

“There has not been a single year in which Pemex’s refining subsidiary has had any net profit and that tells us about the inefficiencies that exist in this business, partly also because of the role played by the personnel,” says Díaz. Pemex has around 120,000 employees, “many of them unionized, which makes the burden of wages and benefits too much,” adds the specialist.

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