Dos Bocas, the new PEMEX refinery that is currently under construction, saw its costs increase to US$9.8 billion, US$900 million more than initially estimated. The higher costs came about because of extensions to the project, said Minister of Energy, Rocío Nahle.
Nahle explained that the increase in costs was due to the addition of a power producing cogeneration plant required so that the refinery can operate autonomously, a 65km gas pipeline and a water pipeline. During the past month, López Obrador revealed that Dos Bocas would cost US$9 billion, completely financed by the state without contracting debt.
When the project was originally announced, its estimated cost was US$8 billion, although experts warned that this was impossible, as they projected extra expenses ranging between US$4 billion and US$6 billion.
Dos Bocas is supposed to start refining operations next year. Nevertheless, the project will reportedly cost 40 percent more than the initial estimate and will likely not be finished in 2022, which was the government’s original deadline. Analysts point out that the price tag now stands at US$12.5 billion. Rocío Nahle, Mexico’s Minster of Energy, offers a different view: “Dos Bocas is being built in record time. Opinions around the world are very positive,” she said recently.
President López Obrador aims to inaugurate the Dos Bocas complex on July 2, 2022, inaugurating the project’s capacity to process 340,000 b/d of crude oil. Several experts assure that this would be a symbolic act, because the refinery, dubbed Olmeca by the president, will not be able to start producing on that day. Currently, its construction is 90 percent completed, less than three months away from the inauguration.
Mexico’s refinery system has a joint processing capacity of 1.6MMb/d. However, due to lack of investment, interruptions and insufficient oil input, the total output stands at only a fraction of this potential.
Refining is an important business for the López Obrador administration, which aims to put the NOC first so that the country can become entirely self-sufficient in the energy sector, particularly when it comes to the supply of diesel and gasoline. The government touts the Dos Bocas refinery as a vital project in this mission, but many question the project’s profitability.
Moreover, consistent with Mexico’s goal to guarantee oil independence, PEMEX aims to stop exporting crude oil entirely. Nonetheless, the 2023 Preliminary General Economic Policy Guidelines (PCGPE), published on April 1 by the Ministry of Finance and Public Credit (SHCP), revealed that contrary to the government’s aim, the country will not be ready to stop exporting crude oil by 2023. Although oil exports will gradually decrease, a research institution asserts that this will not suffice, as Mexico must rely on imports to meet fuel demand.