State-owned oil company Pemex is increasingly slipping behind its ambitious production goals as crude processing fell in July to its lowest point so far this year.
Pemex’s domestic refineries processed 768,732 barrels per day (bpd) in July, well below President López Obrador’s target of between 900,000 and 1 million bpd target by 2024.
Pemex’s processing had increased steadily from around 600,000 bpd at the start of AMLO’s administration in 2018 to a high point of 915,000 bpd in April of this year. However, a series of setbacks since May has caused processing to drop to an average of 821,233 bpd this year, only slightly above the 815,790 bpd registered in 2022.
July was a particularly difficult month for Pemex. A fire on an offshore platform on July 7 killed two workers and caused crude production to temporarily drop by around 100,000 bpd; oil spilled from a nearby underwater pipeline shortly afterwards; and a leak forced the company to shut down Mexico’s largest oil-exporting terminal on July 26.
As a result, Pemex’s total crude production fell to 1.573 million bpd over the month, the lowest level this year. Crude exports fell by 13% from an annual high in June, while processing was also affected. Pemex was forced to import 317,879 bpd of gasoline and 142,167 bpd of diesel over the month, compared to domestic production of 265,771 bpd of gasoline and 153,553 bpd of diesel.
The disappointing performance stood in contrast to claims by Pemex director Octavio Romero Oropeza in June that Pemex had reached a fuel processing capacity of 1.4 million bpd, putting it on track to meet AMLO’s goal of fuel self-sufficiency for Mexico by 2024.
At the time, El Economista newspaper raised concerns that Pemex was increasingly relying on residual heavy fuel oil, which is more polluting and less efficient than other fuels, to boost its total production.
The paper’s analysis suggested that lack of investment in updating Pemex’s machinery – in part due to López Obrador’s austerity plan for the struggling company – meant that its refineries lack the infrastructure needed to transform oil into lighter fuels. Pemex remains heavily indebted, with liabilities over US $110 billion in the second quarter of the year.
Despite these difficulties, the government remains committed to its fuel self-sufficiency target. The new Olmeca refinery inaugurated last year in Dos Bocas, Tabasco, is predicted to boost processing by 340,000 bpd, but only began initial processing operations in July of between 80,000 and 100,000 bpd. It is unlikely to come fully online until late this year, at the earliest.
With reports from Reuters and Expansión
