Mexico’s Refining Shows Improvement

Mexico’s refining operations showed improvement in May, boosted by the Dos Bocas refinery, which processed 115Mb/d last month. This marks the refinery's highest throughput since it began processing crude in February, following 7Mb/d in February, 103Mb/d in March, and 84Mb/d in April.

The Dos Bocas refinery's May performance accounted for nearly half the volume of the Tula refinery, which processed 216Mb/d and was the most productive in the system. Tula surpassed the Madero and Minatitlán refineries in processing volume. Cadereyta followed Tula with 149Mb/d processed in May.

Collectively, Mexico’s National Refining System (SNR) processed 925Mb/d in May, a consistent volume when compared to the 1.015MMb/d recorded in March. Dos Bocas contributed approximately 12% of the SNR’s total processed volume in May.

PEMEX’s fuel production remained stable throughout the year, with May’s production at 328Mb/d, the second-highest level after 344Mb/d in April. The country has also reversed its trend in fuel oil production since last year. In September 2024, the SNR produced more fuel oil (293Mb/d) than gasoline (284Mb/d). However, by October, this ratio inverted, with gasoline production at 256Mb/d versus 174Mb/d of fuel oil. By May 2025, the SNR processed 328Mb/d of gasoline, while fuel oil production stood at 237Mb/d.

Despite progress in refining, Mexico’s state-owned company PEMEX faces challenges in boosting downstream output as it aims to substitute imports with domestic products. The 340Mb/d Olmeca refinery in Dos Bocas is currently ramping up, with full operations anticipated in 2026. The first 170Mb/d phase began in late 2024, with the second phase expected later this year. This is a significant step alongside PEMEX’s overhaul program for six refineries, including unit upgrades at Tula, Salina Cruz, and Salamanca. Supported by nearly US$8 billion in planned investments, not taking into account Dos Bocas’, Mexico aims for self-sufficiency and retail price stability through increased production of gasoline, diesel, and jet fuel. 

The International Energy Agency (IEA) in its Oil Analysis Forecast 2025 to 2030 noted that the launch of Dos Bocas will be critical in enabling the region to become a net exporter in light ends by 2030. However, middle distillate balances are expected to tighten modestly due to declining export volumes from refinery closures and continued jet fuel demand growth.

Mexico’s crude and condensate production fell by 20Mb/d to 1.7MMb/d in January 2025, reaching its lowest point since July 2020, according to IEA data in its June 2025 Oil Market Report, "Petronovela: Debt, Declines and Diplomatic Dilemmas in Mexico." Last year saw output decline by 120Mb/d, to 1.8MMb/d, with volumes falling over 110Mb/d in the fourth quarter of 2024 after PEMEX froze oilfield service contracts. Despite nearly US$25 billion in short-term debt owed to suppliers, PEMEX and President Claudia Sheinbaum have committed to resolving payment issues by the end of March. Mexican crude and condensate production is forecast to average around 1.7MMb/d this year, a decrease of another 120Mb/d on average from 2024.

Crude and condensate exports from Mexico have mirrored the production decline, falling by close to 150Mb/d in 2024 to 850Mb/d, a significant drop from its peak of 2.1MMb/d in 2004. Exports could decline further once the Dos Bocas refinery fully enters commercial operations. The share of crude exports to the United States has also decreased from a post-COVID-19 average of 66% to just over 55% in 2024. If Washington imposes 25% tariffs on Mexican crude imports, trade flows would likely redirect to Europe and Asia, where PEMEX maintains existing commercial relationships. 

Maya and Isthmus grades, heavy sour and medium sour crudes respectively, constitute the majority of exported barrels globally and to the United States. While possible substitute grades for Mexican Maya crude include Arab Heavy, heavy Western Canadian Select, or Ecuadorian Napo, and Arab Light or Ecuadorian Oriente for Isthmus, a tight heavy sour market raises questions about the availability of suitable qualities and quantities at competitive prices.