Pemex gives ultra-low sulfur diesel US$2.8bn boost

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Friday, September 12, 2014

Mexico's state-owned oil firm Pemex announced investment totaling US$2.8bn to refit five refineries and build new installations to produce ultra-low sulfur diesel.

The five contracts are for upgrades at the company's Francisco I. Madero, Minatitlán, Salamanca, Salina Cruz and Tula refineries, Pemex said in a press release.

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Pemex signed a US$737mn contract with ICA Fluor Daniel for the refitting of the Madero refinery, a US$568mn contract with Técnicas Reunidas for the Minatitlán refinery, and a US$359mn contract with Samsung for the Salamanca refinery.

It also inked a US$584mn contract with Foster Wheeler for the Salina Cruz refinery and a US$560mn contract with a consortium made up of ACS, Dragados and Cobra for a refit of the Tula refinery.

The contracts will generate around 20,000 direct jobs, Pemex CEO Emilio Lozoya Austin said.

The works are a sign that energy reform is beginning to achieve its two main aims, to strengthen Pemex and promote energy infrastructure investment to boost economic growth, Lozoya Austin added.

Energy minister Pedro Joaquín Coldwell said that the projects mark a new era for Pemex as a productive state firm, and would benefit the country by allowing the sale of clean fuel, proof of Pemex's priority of caring for the environment.

Producing ultra-low sulfur diesel is not only a long-held desire of environmentalists but also of the nation's industry, and this crucial move had been delayed for years but is now possible thanks to energy reform, Mexico's environment minister Juan José Guerra Abud added. The contracts come into force on September 17 and the resultant works will allow Pemex to produce around 360,000b/d of ultra-low-sulfur diesel, the use of which will improve air quality and reduce greenhouse gas emissions, he said.

By 2015, 60% of the diesel consumed in Mexico is expected to be ultra-low sulfur, and by end-2017 output is forecast to comply with the 086 clean fuel norm.

Pemex currently produces 100,000b/d of ultra-low sulfur diesel and by next year 100% of the country's production will be low sulfur, said Miguel Tame Domínguez, director of Pemex Refining. The use of low sulfur fuels allows motorists to save 5% on consumption and reduces emissions by 20%, he said.

BNamericas will host its 11th Southern Cone Energy Summit in Lima, Peru, on November 12-13. Click here to download the agenda.