Mexico kicks off $7.7 billion refinery construction
MEXICO CITY (Bloomberg) -- Mexico is kicking off the construction of its $7.7 billion (150 billion peso) oil refinery amid a call by President Andres Manuel Lopez Obrador for the country to become self-sufficient in energy production.
The nation “depends too much on buying foreign gasoline,” the president, commonly known as AMLO, said at an event Sunday in Paraiso, Tabasco, where the seventh refinery will be built. The bidding process for the six phases of the refinery begins at the end of June.
The leader also used the platform to rally the country after U.S. President Donald Trump threatened in the past week to slap a 5% tariff on all goods from Mexico if it doesn’t curb an unprecedented surge in migrants over the U.S. border.
AMLO, who’s scheduled to visit Washington this week, said Mexico wants to continue to be friends with the U.S. and reiterated his country’s good relations with its northern neighbor. However, he also said that Mexico “isn’t a colony of any foreign country.”
“The president of Mexico wants to continue being a friend of President Donald Trump. But above everything, Mexicans are friends of the people of the United States,” AMLO said to cheers from crowds that had gathered at the Dos Bocas port following a critical tweet from Trump. “To them, I dedicate this message from Paraiso, Tabasco. We want nothing and nobody to separate our beautiful and sacred friendship.”
Refinery targets
AMLO reiterated that the refinery will be inaugurated in three years, adding that it will be built by the government rather than a third party.
Last month, the Mexican leader handed the project to Petroleos Mexicanos after he canceled a tender when the bidders failed to meet his ambitious three-year timeline and stay within the $8 billion budget allocated for it.
While the Dos Bocas refinery has 50 billion pesos in initial resources allocated for the year, the project may be problematic for Pemex, the world’s most indebted oil major. The state-owned oil company’s six refineries are currently processing at about 35% of their capacity.
Refinery upgrade projects that began in the early 2000s have yet to be completed. Another much-lauded plan to build a refinery in Tula, Hidalgo, for $12 billion was scrapped by the previous administration five years after it was announced.
Pemex’s existing refineries are in such poor shape that they lose more money the more crude they process. The Salina Cruz, Minatitlan and Madero plants all have been offline intermittently in the past several years, which Pemex has said is due to extended maintenance or because of operational problems.
The proposed Dos Bocas plant was one of AMLO’s campaign pledges and he pushed the project through a public consultation after taking office in December.
