Mexico's Olmeca refinery seen unlikely to start operating this year

Mexico's energy ministry Sener has doubled down on its aggressive timeline for the operation of the US$12bn-US$16bn Olmeca (formerly Dos Bocas) oil refinery in Tabasco state.

Energy minister Rocío Nahle expects the refinery to produce gasoline in 2023, countering internal and external skepticism regarding the project's construction schedule.

Local media reported Nahle as saying that construction finished after inauguration earlier this year, and pending works only involved "integration and testing," also contradicting analysts’ assessment that the megaproject, in practice, is still in its construction stage.

An internal report by Sener leaked to press earlier this year said Olmeca would reach 80% of its 340,000b/d nameplate processing capacity no earlier than 2026, although it did expect some form of first production next year.

"The question here is when works will be finished," Óscar Ocampo, energy coordinator at competition think tank IMCO, told BNamericas. "Conservative estimates from outside the government speak of 2026. I think it is a fact that, by October 2024, Dos Bocas will not be processing any barrels of crude."

According to Nahle, a rapid testing of the facilities could allow Olmeca to receive its first crude oil input this December, although this will depend on security concerns. "We are working to have the conditions in place," she said.

“They do not yet have the infrastructure to start the testing phase,” Ocampo said, however. “Dos Bocas is still a construction site today.”

Refinery overhaul

Olmeca is part of the push by Sener and oil and gas giant Pemex to boost its crude processing capacity and achieve fuel self-sufficiency. The goal also involves the overhaul of Pemex's six existing refineries.

So far, the overhaul has been successful, lifting the utilization rate of Pemex’s capacity above 50%. However, the refineries are producing large quantities of fuel oil, which is highly polluting and has less added value than gasoline, although it can be used to fuel some thermal generation units. Pemex's data shows that, as the company managed to get its fuel output close to 2017 levels, fuel oil production has risen sharply. 

Pemex has set new refinery output targets, under which the firm expects to continue increasing overall output while limiting fuel oil production. According to its latest projections, it expects to produce 710,000b/d of fuels this year, reaching 1.1 million barrels per day in 2024, with fuel oil output falling from the current 30% to 28% next year and 27% in 2024.