PEMEX to Import All of Deer Park’s Production by 2024

According to Alberto Velázquez, Director of Commerce, PEMEX, the company currently sends 25 percent of the Deer Park refinery’s products to Mexico. The NOC has followed a strategy of increasing crude oil production to increase refining instead of focusing on exporting crude.

Guided by President López Obrador’s instructions to focus on refining, PEMEX bought half of Shell’s Deer Park refinery and has worked to get its Olmeca refinery in Dos Bocas operational. So far, Dos Bocas’ initial cost has doubled, and has no set date to start operations. Rocío Nahle, Mexico’s Minister of Energy, said that security processes were being carried out before it could go into operation and are currently in the integration phase, therefore PEMEX will begin taking over the project next month. The refinery is expected to start commercial operations at 50 percent capacity by 3Q23.

Meanwhile, PEMEX CEO Octavio Romero Oropeza reported that the acquisition of Deer Park turned out to be a great decision since it is already yielding a return on the roughly US$1.5 billion investment. The refinery is also already contributing to energy security. According to Velázquez, PEMEX expects to be able to send 100 percent of Deer Park’s production to Mexico by 1H24, contributing to energy sovereignty.

Last week, López Obrador announced that some sections of the Mayan Train will operate with clean fuels refined at Deer Park. The president underscored that the diesel has a low sulfur content and will be also distributed throughout the Yucatan peninsula, Chiapas and Tabasco. The Mayan Train will be a hybrid, powered by electricity and fuel.?

While Mexico reduced its exports over the past couple of months and its refined production increased, fuel imports also increased. The acquisition of Deer Park has indeed proven to be a great business thanks to the rise of fuel prices, experts agreed. PEMEX also experienced good results thanks to the hike in crude oil prices earlier this year. Nevertheless, Moody’s Investors Service recently downgraded PEMEX’s credit rating based on its economic outlook. Moody’s qualified Mexico’s refining-oriented strategy as flawed; PEMEX’s refining subsidiary lost US$7.37/b during 3Q22.

Despite advancements in Mexico’s energy goals, the government’s plan to achieve self-sufficiency by 2023 no longer appears to be in reach, as analysts point out that Mexico needs better energy planning for the long term.