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The planned Dos Bocas refinery in Mexico, the favorite project of Mexican President Andrés Manuel López Obrador for weaning the country off fuel imports, sits in a protected area which state oil firm Pemex pledged to protect more than a decade ago in exchange for drilling rights nearby, Bloomberg reported on Tuesday, citing environmental assessment documents it had seen.
Originally, the plan for the Dos Bocas refinery in López Obrador’s home state of Tabasco was expected to cost US$8 billion. According to Pemex’s latest annual report, the refinery would now cost up to US$12.4 billion, Argus reported earlier this year.
The touted start date of July 1, 2022, will not be the start of commercial operations, but the start of trial runs, Argus quoted Pemex’s annual report as saying.
Apart from cost overruns and delays in the timeline, the Dos Bocas refinery is now found to be located in a protected area of mangroves which Pemex vowed to protect and not “be allowed to develop projects and activities in areas” where the mangroves grow, according to the documents seen by Bloomberg.
Satellite images verified by Bloomberg show that after Pemex started building the refinery, mangroves are being cut down in the area.
The Dos Bocas refinery is a key pillar of López Obrador’s plan to revive the Mexican state-owned firm and ensure the so-called “energy independence” for Mexico.
López Obrador, a leftist populist, came to power with the promise to increase state support for Pemex and make the state-run major the pillar of a turnaround for the country’s declining oil production.
Pemex—a heavily indebted company—relies on issuing bonds to finance and refinance its maturities, and the financial situation at the Mexican state oil firm has further deteriorated since oil prices crashed in March last year.
Despite mounting debts and declining crude production, Pemex is focused on Dos Bocas refinery, which was a key campaign pledge of the president to reduce Mexico’s reliance on fuel and refined product imports, most of which come from the United States.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com