Fuel Oil Demand DecreasesBy Pedro Alcalá | Fri, 06/11/2021 - 16:38
Data from SENER indicates that national fuel oil consumption has decreased considerably given the market gains made by renewable energy sources.
The largest national consumers of fuel oil, which in Mexico continues to be exclusively produced by PEMEX, have continued to be CFE’s thermoelectric power plants. However, the percentage of energy generated by these plants has been decreasing steadily over the last couple of years. Generation data indicates that this is due to the larger amount of renewable energy projects that have come online during that time. According to data reported to SENER by CENACE, in April of 2019, energy generated at thermoelectric plants amounted to 3.2 million MW/h. By April of 2020, that number reached 1.6 MW/h, representing a decrease of 51 percent in just one year. By April 2021, that number is reported to be only slightly above that previous number, meaning that the decrease has been stabilized but the curve continues to show a negative trend. This is without taking into account that these plants are mostly fed fuel oil, but can also take diesel or even natural gas if necessary.
Many of these thermoelectric plants were scheduled for decommission in the short term, but recent changes to the sector’s legal framework have made them more relevant. This is according to a report from Expansión which claims that a series of agreements within CRE has perpetuated the use of these plants, despite this kind of energy being considered more expensive than renewable energy. This has created a number of environmental concerns given fuel oil’s reputation as the most polluting of hydrocarbon products. Although a purchase agreement for fuel oil between PEMEX and CFE was reportedly signed at the beginning of this year, no details of this deal are currently known to the public.
Despite this decrease in demand, Mexico’s production and export of fuel oil has increased, as had been reported earlier, despite the value of this commodity decreasing globally due to a number of environmental regulations. An analysis from Expansión published in November of last year observed that fuel oil has become the number one product of Mexico’s refineries, more than any other fuel or refined commodity. SENER leader Rocio Nahle has defended this strategy in public forums, claiming that the NOC’s strategists foresee a global jump in fuel oil demand.