News Article

Dos Bocas Only One Piece of the Puzzle

Wed, 07/17/2019 - 17:06

Although the Dos Bocas refinery project continues to attract the most attention within the new administration’s portfolio of flagship infrastructure and development projects, this initiative can only be understood within the larger context that calls for a massive reactivation of Mexico’s National Refining System, Director General of IMP Marco Antonio Osorio said today in Mexico City.

Osorio conveyed this vision as part of a presentation entitled The Future of Mexico’s Refining and Storage Infrastructure, which took place in the afternoon session of Day 1 of the two-day Mexico Oil & Gas Summit at Sheraton María Isabel Hotel. Osorio began his remarks by addressing the doubts often repeated in the media regarding the centralization of fuel supply and availability in the new administration’s energy policy. “We understand that investing in fossil fuels seems contrary to the contemporary global trend toward renewable and clean fuels, but we must strengthen key aspects of our energy supply security while this long-term transition takes place,” he said.

While specifics can differ greatly, Osorio identified the best possible scenarios for this transition still call for 50 percent of overall energy sourcing in fossil fuels by 2050. “Taking this and other factors into account, such as Mexico’s ever-growing national automotive fleet, it is clear that we must position ourselves to take as much advantage as possible of our upcoming oil and gas production increases through the regeneration of our National Refining System.”

In Osorio’s estimation, the threats to the security of Mexico’s fuel and energy supply were multifaceted; although fuel theft was mentioned, Osorio insisted on looking at the bigger picture: “For example, our reliance on US imports, specifically those from the Gulf Coast, put Mexico at the mercy of the weather emergencies that characterize this region.” Osorio’s argument also relied heavily on the contrast between Mexico’s 24 percent of energy consumed being produced nationally and Colombia’s proximity to 90 percent in this same metric, not to mention China’s 100 percent. 

As is well-known, Mexico’ refining systems operated at 40 percent of its installed capacity in 2018. Osorio explained the historical and petrochemical background of this particular deficiency of the system, while also using it as a central part of his argument that Dos Bocas must really only be one component of a strategy that calls for finishing the reconfiguration of the three (out of Mexico’s six) refineries that are not able to efficiently process the majority heavy oil produced by national assets. Osorio noted that of these three refineries, Tula is the one closest to being ready for this process of optimization.

Osorio made it clear that his goals covered not only supply security but also equity of access to energy products through lower costs and an expanded distribution network, in addition to ambitious fuel production goals to reduce fuel imports. “Our ideal scenario calls for reducing fuel imports from our current 620 Mb/d to 120 Mb/D,” he said.