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December 27, 2005 at 3:39 pm #4273
Mexican Oil Monopoly Mulls 7th Refinery
December 19, 2005
AP / MEXICO CITY – The head of Mexican state oil monopoly Petroleos Mexicanos, or Pemex, said Monday the company is contemplating building a seventh refinery in Mexico.
The refinery would either be built in the Gulf coast state of Veracruz or on the Pacific coast, and get Pemex closer to meeting domestic demand for gasoline, chief executive Luis Ramirez said.
If the government approves expenditures for the $4 billion refinery, it could be operating by 2010, he said at a luncheon with journalists.
Despite being the world’s third biggest crude company with average daily output of 3.33 million barrels this year, Pemex lacks the refining capacity to meet growing domestic demand for gasoline.
Pemex is a major supplier of crude to the U.S. market, and most of the 1.8 million barrels a day it exports heads to refineries along the U.S. Gulf Coast that specialize in processing heavy crude.
The need to diversify its customer base, or build more plants in Mexico, became clear for Pemex after hurricanes Katrina and Rita this year, which knocked almost all of the state company’s overseas clients off-line for several weeks. The company also missed an opportunity to supply higher priced gasoline to U.S. consumers.
Meanwhile, demand in Mexico for gasoline has increased by 25 percent since 2000, to 664,000 daily barrels. During the first 11 months of this year, Pemex satisfied a quarter of that demand with imports.
Thanks to record high crude prices, the company expects to report revenues of $70 billion this year and $80 billion for 2006. Pemex hands over about 60 percent of its sales to the Mexican government, which in turn uses the cash to fund a third of the annual federal budget. Major capital expenditures — such as a refinery — would require congressional approval.
Under Mexico’s Constitution, private investment in the energy sector is severely restricted.
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