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Oil Prices Rebound On Small Crude Draw

Oil Prices Rebound On Small Crude Draw

Oil prices rebounded today after…

Tender For Mexico’s Tabasco Refinery To Start In March

Mexico will start accepting bids for the construction of a new refinery, estimated to be worth US$8 billion by March next year, President Andres Manuel Lopez Obrador said, as quoted by Bloomberg.

Raising Mexico’s crude oil production and the amount that is refined locally is a top priority of Obrador’s program that aims to reduce dependence on imported fuels. The plan includes boosting local oil production to 2.4 million bpd by 2024. Mexico’s state oil company Pemex said last month it produced an average 1.76 million bpd of crude in October, down 7 percent from October last year. The country’s annual output has been on the decline since 2004, Bloomberg notes, due to field depletion and lack of investment in new production.

But the production boost is only one part of the plan. The other is a substantial increase in local refining capacity: the planned refinery will have a capacity of 340,000 bpd, which will make it the largest in the country. Yet the existing facilities also need attention: they have been operating at lower than average rates in recent months, hitting a record low of 25.7 percent in October on the back of shortages of light crude and technical difficulties at some refineries.

Meanwhile, however, the new government has suspended all oil tenders for at least three years, Bloomberg reported earlier this month, citing Obrador as saying, “We can’t continue giving oil territory if there’s not a more significant investment. What we want is that they [foreign oil companies] demonstrate that they will invest and produce oil from these contracts.”

The government last month began a review of existing contracts, signed by Enrique Peña-Nieto’s government with foreign oil industry players as an essential part of an energy sector overhaul. The Obrador administration review will determine if there were any signs of graft involved in the signing of these contracts.

By Irina Slav for Oilprice.com

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  • Ricardo on December 10 2018 said:
    All of Mexico invests half as much per year as Chevron. If Mexico had not confiscated oil investments a hundred years ago the country would likely be producing 5 million bbl/day with competent management.

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