Pemex to stabilize crude processing by year end

OREANDA-NEWS. November 01, 2016. Mexico's state-run Pemex plans to stabilize and possibly revive crude processing at its domestic refineries by the end of the year.

Utilization at the firm's six Mexican refineries has sunk to records lows in recent months, reflecting a persistent decline in crude production and driving up imports of refined products.

During a 28 October third quarter results conference call, Pemex executives attributed the decline in crude processing to scheduled maintenance, a lack of auxiliary services and unplanned shutdowns, especially at the Cadereyta and Madero refineries.

"Maintenance at Cadereyta and Madero will be completed during the fourth quarter and we expect to see levels similar to those we had at the beginning of 2015 by the end of this year," said Carlos Murrieta Cummings, director of the firm's downstream unit, Pemex TRI.

Earlier last week, Pemex chief executive Jose Antonio Gonzalez Anaya told reporters he is hoping for a slight increase by December.

Processing at Pemex refineries in the third quarter fell by more than 20pc year on year, reaching 849,000 b/d – the lowest since 1990.

During the month of September alone, Pemex processed a historic low of 766,308 b/d of crude, down by 27.5pc year on year, with 210,000 b/d Cadereyta, seen as one of Pemex's most profitable refineries, processing just over 78,000 b/d, 41pc less than a year ago.

As a result, total products output in the third quarter, including gasoline, plunged by 20.5pc to 980,000 b/d. Third quarter refining margins contracted by 36pc to \\$2/bl.

According to Mexico's energy secretary Pedro Joaquin Coldwell, Pemex lost 903bn pesos (\\$48bn) in refining operations in 2008-2015, or an average of 113bn pesos per year.

Deep financial strain at Pemex led to the suspension of large upgrade programs at three of Pemex's six ageing refineries – Minatitlan, Tula and Salamanca.

The refineries were designed to process light crude but Mexico's crude is growing heavier. "We need substantial investments to be able to go through with the upgrades," Coldwell told lawmakers on 25 October.

The energy secretary added that Pemex's 2017 business plan, which will be presented on 3 November, contemplates an association with the private sector to revive the projects.

Pemex has been talking of teaming up with the private sector to help revamp its refineries since 2015, but interest has been tepid, with refineries in the neighboring US Gulf Coast seen as more modern and efficient.

Pemex has 1.6mn b/d of installed atmospheric distillation capacity in Mexico, according to the energy ministry's 2015-29 energy outlook report published in March 2016, but operational levels are much lower.