Operations at Mexico's Dos Bocas Olmeca Refinery Delayed to 2024

Mexico's newest refinery, the Olmeca Refinery in Paraiso, Tabasco, will not begin commercial operations this year, as had been expected. Petroleos Mexicanos' (Pemex) (Mexico City) 340,000-barrel-per-day (BBL/d) facility will not open before May 2024, as tests continue.

Works at Olmeca will continue with the sour water treatment unit's construction finalized and operating along with the demineralization plant, which is running at 30% capacity. Subscribers to Industrial Info's Global Market Intelligence (GMI) Project and Plant databases can learn more from a detailed project report and plant profile.

The Olmeca Refinery is one of the government's flagship projects, though it has been impacted by delays. Initially, the government expected the refinery to be operational by July this year; then, in August, Mexican President Andres Manuel Lopez Obrador said the refinery would operate at a capacity of 170,000 BBL/d by the end of this year. The date was later postponed until the end of 2023.

Fuel transportation from the new refinery remains a key question mark, due to the lack of pipelines to transport refined products. In a press conference in August, Lopez Obrador said that his administration would not build a train connecting the refinery to the Isthmus rail network.

Instead, the president said that fuel could be transported through the Dos Bocas port and by tank trucks: "We are not going to have any problems, because the fuel can be taken out by tanker trucks, and we have the port of Dos Bocas to take the fuel by sea from Dos Bocas to Progreso port (Chiapas), and from Dos Bocas to Coatzacoalcos (Veracruz), and towards Veracruz (port), the entire Gulf."

The Dos Bocas port does not contain any clean products berths, according to Industrial Info's latest findings. The use of tank trucks for gasoline transport is a strategy implemented by the government to reduce fuel theft along Mexico's pipeline network. In 2022, Pemex lost 6,100 BBL/d of fuel due to theft, about 69% more than the previous year.

Currently, Pemex has a downstream capacity of 1.64 million BBL/d across six refineries. However, the utilization rate of those units has been close to just 50%.

As a result of low refining rates, Mexico relies on fuel imports to fulfill its domestic demand, a situation that Lopez Obrador wants to overturn with the construction of Olmeca.

However, Mexican oil exports are expected to decline once the Olmeca Refinery begins normal operations, as more crude will be destined for the local refining industry, and Pemex struggles to boost oil production.

For Hillary Stevenson, IIR's Senior Director of Energy Market Intelligence, "Dos Bocas is all about the crude quality displacement. Should the refinery reach full utilization, essentially all of Maya exports to the U.S. will be consumed, increasing the value of other heavy sour grades like Canadian and Venezuela crudes. This comes at a time when the global market is already short medium/heavy barrels due to production restraint from OPEC+. Completion and successful operation of Dos Bocas Olmeca will help to narrow heavy/light crude differentials."

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