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Some members of the board of directors at Pemex have expressed concerns about the huge overruns the Mexican state oil giant faces in building its flagship mega refinery Dos Bocas, sources familiar with the board deliberations told Bloomberg.
While Pemex’s board approved an increase in the budget for the refinery project last week, the vote wasn’t unanimous. Three board members were against raising the budget, according to Bloomberg’s sources who spoke on condition of anonymity.
Moreover, at least one board member expressed concerns that cost management might not be as transparent as it should be, Bloomberg’s sources said.
Early this year, it emerged that the construction of the Dos Bocas refinery was running $3.6 billion over budget, and delays could mean that the flagship project of Mexican President Andrés Manuel López Obrador may not start operations this year and not even in time for the state oil firm’s plan to end oil exports in 2023 and focus on refining fuel domestically.
Dos Bocas is the pet project of López Obrador designed to wean the country off fuel imports. Originally, the plan for the refinery in López Obrador’s home state of Tabasco was expected to cost US$8 billion. Even when it was announced, analysts doubted the budgeted costs would be sufficient and were not optimistic about the financial viability of the refinery.
Last week, Pemex asked the government for another nearly $6.5 billion in funding for works at the refinery this year, a document seen by Reuters showed.
Higher costs for building “associated” components necessary to operate the refinery are the main reason for the increase Pemex is seeking, according to the document.
With the additional funding, Pemex’s flagship refinery, which was expected to start operations this year, would see total costs rising to a massive $14.6 billion, far above the original $8-billion budget.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.
Those recalcitrant board members are just reactionary forces to the progress of future glory. For shame!