Mexico to Invest $12 Billion in Refining Capacity

Latin American Herald Tribune, 4/15/2009

State-owned Petroleos Mexicanos will spend more than $12 billion to build one new oil refinery and upgrade an existing facility, Pemex chief Jesus Reyes Heroles said here Tuesday. Mexico’s first new refinery in three decades is to be located in Tula, Hidalgo state, and Pemex expects the plant to be operational by sometime in 2015, Reyes told a press conference in the capital, while the expansion of the facility in Salamanca, Guanajuato, should be complete by the end of 2014.

Between them, the Tula refinery and the refitted Salamanca plant are expected to produce 300,000 bpd of gasoline, but without additional projects, Mexico, a key U.S. supplier of crude, would still have to import 500,000 bpd of fuel.

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Oil Addiction: Don’t Count on Mexico to Supplant Mid-East Crude

Pemex president Jesus Reyes Heroles

Wall Street Journal, 1/20/2009

Whether the calls for reducing America’s oil dependence on the Middle East that played such a big part in Barack Obama’s campaign will find a home in today’s inaugural address is an open question. But one thing is increasingly clear: America won’t be able to count much on Mexico, still its third-biggest supplier, to help it wean off Persian Gulf oil.

The Mexican oil industry is in steep decline. The huge production falls seen through the first nine months of the year continued in the fourth quarter, Bloomberg says, as Mexico’s state oil company is set to report its steepest annual production declines since World War II. Mexican production will fall from more than 3 million barrels a day in 2007 to about 2.8 million barrels in 2008, Bloomberg estimates.

President-elect Obama repeatedly promised to reduce America’s dependence on Middle Eastern oil. But with Mexico struggling to keep its head above water, and Canada’s tar sands an environmental no-go zone, making that promise a reality may be one of the next administration’s biggest challenges.

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