Operations at Tula Refinery and Dos Bocas Resumed

This month, strikes halted operations at Mexico’s Tula refinery and stopped construction of the Dos Bocas refinery. Issues were resolved on Oct. 22 and Oct. 14, respectively. Tula was shut down for three weeks, which had significant implications for the energy sector. Issues at Dos Bocas were resolved in a mere two days.

The Tula refinery, in Hidalgo, was practically closed for weeks because of a rail and road blockade from protesting teachers. As a result, the refinery was forced to stockpile fuel oil that state utility CFE burns to produce energy, reported Reuters. The fuel is usually transported via tanker trucks. Though Tula has a refining capacity of 315Mb/d, it has been operating well-below potential, reaching 153.4Mb/d in Aug. 2021. “A higher level of investment in corrective maintenance is necessary since the refinery experienced a disproportionately higher amount of stoppages during August,” energy analyst Ramses Pech told El Financiero earlier this month.

President López Obrador mentioned that the teachers went on strike because they were not paid their salaries. With the issue dealt with, the president expected that protests would disappear. “We do not have reports of problems,” said López Obrador after he announced Tula’s return to functioning.

Issues at the construction of the government’s flagship US$8 billion Dos Bocas refining project began when workers of engineering, procurement and construction (EPC) firm ICA Fluor found issues in their collectively-bargained contracts. The employees sought better pay and improved working conditions. López Obrador was quick to call the strikes a “passing” issue and “a matter between unions,” but the work stoppage escalated to a confrontation between workers and the police. Some news outlets reported that several people got injured as a result and even hinted at a death on the scene, although the president debunked the rumor: “Yesterday, with the confrontation and a police intervention, people were already talking about a death. They are very eager to see a tragedy happen, for us to take a wrong step,” he said, comparing the opposition to vultures hovering over problems. Not long after the unrest, work appeared to return to normal.

Refining is an important business for the López Obrador administration, which aims to put the NOC first for the country to become entirely self-sufficient in the energy sector, particularly when it comes to supplies of diesel and gasoline. The government touts 340Mb/d Dos Bocas refinery as a vital project in this mission to supply its own refined oil products, but some experts question the project’s profitability.