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Oil processing at Mexico’s national oil company Pemex increased substantially in July from the previous month, while crude exports rose slightly in a reversal of earlier national policy to cut exports and focus on the domestic market.
According to the state-owned oil company's most recent report, average oil processing for July stood at 820,128 barrels per day (bpd), up 15% from June and a rise of 29% from July 2021. However, the July figure is still below the target of 1 million bpd set by the government and Pemex for the end of 2022.
Oil production remained close to 1.7 million bpd, also below the target of 1.9 million bpd for 2022.
As part of the plan, Pemex was to cut crude oil exports from over a million barrels per day to just 435,000 barrels a day in 2023. The move was part of President Andrés Manuel López Obrador’s (AMLO’s) drive to lower imports of costly refined products, such as gasoline and diesel, and instead rely more on domestic production. “Practically 100% of Mexican crude will be refined in our country,” Pemex head Octavio Romero Oropeza said at the much-heralded opening of a new refinery in the southeastern state of Tabasco.
The U.S. is Mexico’s largest oil export market, with the Latin American nation selling American refineries 710,000 barrels per day in 2021 but also importing 1.16 million b/d.
But high oil prices and an uncertain economic outlook including high inflation might see those plans shelved by the Mexican government.
High oil and gas prices helped Pemex report net profit of $12.7 billion for the first six months of the current year compared with a loss of $1.15 billion in the first half of 2021 despite export volumes falling 5% to 5.68 million barrels. A barrel of Mexican crude averaged $97.80 during the period, with prices peaking in March to $119.62 shortly after Russia’s invasion of Ukraine. The high profits prompted AMLO to declare that Pemex, “was in bankruptcy and it is now being reborn.”
By Alex Kimani for Oilprice.com
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Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com.