Pemex plans to spend $23 billion to upgrade its refinery system, expand its crude oil processing capacity and boost production of clean fuels, government officials said this week.
These upgrade projects, some of which have already started, come amid Pemex’s struggles with budget cuts- as a result of low oil prices- and new competition from foreign and private companies in the wake of energy reform.
President Enrique Nieto unveiled the planned investments at the Tula refinery in central Mexico. Pemex is now in the process of implementing a $5 billion upgrade that will transform the facility into the company’s largest refinery, with processing capacity of 340,000 bpd.
Pemex also said it plans to upgrade refineries in Salina Cruz and Salamanca for around $8 billion.
Other spending includes $3.1 billion at all of Pemex’s refineries aimed at more than doubling production of ultra-low-sulfur gasoline to 212,000 bpd. And $3.9 billion has been designated to increase output of ultra-low-sulfur diesel and hence decrease imports of the fuel.
The company’s six refineries yielded output of an average of 1.27 M/bd of refined products in the first 10 months of 2015, the Wall Street Journal reports. That’s a 1.39 million drop in all of 2014.
Pemex CEO Emilio Lozoya (left) with Mexico President Enrique Pena Nieto
The announcement of the investment plan comes nearly a year after Pemex said it would postpone some refinery upgrades and clean fuels projects due to about $4 billion in 2015 budget cuts it enacted due to low oil prices.
Pemex CEO Emilio Lozoya said at the Tula refinery event that the company has been successful in lowering operating and administrative costs this year by several billion dollars. He added that Pemex seems to have stabilized its oil production in 2H15 at 2.27 M/bd.
Lozoya said that Pemex made additional O&G discoveries in 2H that potentially could hold reserves of 180 Mboe in two shallow water deposits and could ultimately produce 40,000 bopd and 25 Mcfd of natural gas.