Image credits: PEMEX
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News Article

Fuel Oil: PEMEX’s No. 1 Refined Product

By Pedro Alcalá | Wed, 11/03/2021 - 17:14

PEMEX produced more fuel oil during the first three quarters of 2021 than any other refined product, achieving the highest production ratio of the last five years and further solidifying the NOC’s strategic bet on this controversial resource.

Based on an analysis of SIE and SENER data published by El Economista, PEMEX refineries produced an average of 245Mb/d of fuel oil throughout the first three quarters of 2021, representing 30.56 percent of the average production of 800Mb/d of all refined products. This is not only the highest level of fuel oil production reached during this period for at least the last five years but also the first time in those five years that more fuel oil was produced at PEMEX refineries than gasoline, since only an average of 224Mb/d of gasoline were produced between January and September of 2021. The aforementioned 800Mb/d total production level is higher than the one reached in 2018, 2019 and 2020, but it is surpassed by 2016 and 2017 results. 

In Mexico, fuel oil is still produced exclusively by PEMEX and its largest national consumers remain CFE’s thermoelectric power plants. As renewable energy projects continue to gain ground in Mexico’s energy mix, fuel oil demand continues to decrease throughout 2021 according to SENER’s data. This decrease in demand has also applied to the international market. This would appear to indicate that PEMEX’s focus on fuel oil production might not be the best path in terms of commercial feasibility or even energy security. However, the latest attempt to reform the energy sector, which is currently being discussed in both chambers of Congress, would prioritize CFE in power generation activities, thus potentially increasing the consumption of fuel oil at these CFE power plants. This makes increased fuel oil production a more logical path but it also remains environmentally controversial given the fact that burning fuel oil is the dirtiest possible process for generating power, according to climate change experts. 

Fuel oil exports are still increasing despite falling demand and market value. SENER leader Rocío Nahle has been vocal in her defense of fuel oil production, claiming that PEMEX strategists foresee a global jump in fuel oil demand and that world leaders have privately expressed interest in buying more of it. This is potentially contradicted by the fact that international regulation passed by the UN in 2020 limits the maritime use and shipping of fuel oil to protect ocean ecosystems from pollution, thus further decreasing the global market value of this commodity.

The data used in this article was sourced from:  
MBN, SENER, SIE, El Economista
Photo by:   PEMEX
Pedro Alcalá Pedro Alcalá Senior Journalist & Industry Analyst