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RE: Pemex Considers 7th Refinery



Pemex has made investments in several refinery coking unit additions to enable the processing of heavier Mayan crude (through JV participation with Cemex who is a customer for the petroleum coke), and enable the lighter Mexican crudes like Isthmus, & Olmeca to remain in the higher priced export markets, and reduce the heavier component of the marker Mayan blend. This 7th Pemex refinery will likely need coking capacity IF it gets congressional approval & gains government funding.
The Pemex expansion problems for this 7th Refinery runs into the same issues that have foiled development of huge Natural Gas reserves along the Texas border and huge Crude reserves lying offshore. The Mexican government takes 60% of Pemex sales to meet a federal budget, leaving Pemex without capital of its own to expand with, the needed foreign technology /production investment is severely restricted & not allowed to participate in ownership, and since the government is only balancing expenditures by using Pemex revenue it too has limited budget for expansion across several infrastructure areas.
The advantage this refinery investment has is the demand growth in Mexico has a net cost disadvantage (exporting discounted cheap Maya crude but importing expensive incremental gasoline products), enables an alternate in-country option for disabled consumers (like US refineries after hurricanes Rita & Katrina) and INCREASES net sales to both Pemex & Mexican Government.
Perhaps the stacking of yet another costly “missed opportunity” for Mexico’s Energy sector will be enough to break thru the “Catch 22” funding & investment roadblock that is decades old and obsolete in a Global economy.
Charlie Randall

Refining Community