Dos Bocas’ Cost Doubles: The Week in Oil and Gas

PEMEX reported strong finances in 2023, heavily supported by federal help. Among the financial help the NOC has received is a generous budget for Dos Bocas, which has more than doubled. However, the refinery is expected to reach full capacity by the end of March.

Ready for more? Here is the weekly roundup!

Dos Bocas Nears Production While Costs Increase

The Dos Bocas refinery is finally reaching the production stage, reports PEMEX. Diesel is estimated as the first output. PEMEX’s CEO stated that the refinery will reach full capacity by the end of March. However, despite continuous delays, the refinery costs have surged. Cost increased from the original US$8 billion to US$18.9 billion.

PEMEX Finances Remain Stable Thanks to Federal Support

The company’s finances remain stable thanks to federal support. PEMEX reported earnings of MX$109.920 billion significantly supported by direct capital injections and tax reductions. Nonetheless, the NOC’s debt to its suppliers increased by 27.5% compared to the previous year, marking the highest debt level in 13 years.

Cadereyta Refinery Drama Escalates

Nuevo Leon announced the closure of PEMEX's Cadereyta refinery after it failed to cooperate with environmental inspections. Access to the refinery was denied to the state government's work team and environmental activists, with armed military personnel stationed at the plant, prompting the total closure.

PEMEX Continues Activities; Another Termination Process Begins

PEMEX is in discussions with global investment firm KKR to acquire the Servitux terminal in Tuxpan. The NOC plans to acquire the terminal for a significantly lower price, all of this after the company faced closure due to deficiencies, sparking concerns in the energy sector and diplomatic tensions.

While PEMEX is on its way to regain power in the market, Shell has initiated the process to terminate another deepwater contract. The CNH-R02-L04-AP-PG02/2018 contract, located off the coast of Tamaulipas.

Low Oil Demand Projections Worry OPEC, US Takes Advantage

OPEC+ countries announced an extension of voluntary cuts totaling 2.2MMb/d. Russia joined the production cuts. The decision extends the production cuts until the end of 2Q24, according to the OPEC Secretariat.

Meanwhile, The US Department of Energy's (DOE) Oil Reserves Office requested about 3MMb of oil to deliver to the Strategic Petroleum Reserve (SPR). The US replenishes its famous oil reserve as oil reports low prices.

CRE Issues Cross-Ownership Regulations for Hydrocarbons Sector

CRE published an agreement to set forth general administrative provisions related to cross-ownership in the hydrocarbons sector in Mexico. The agreement focuses on competition, efficiency, and open access.