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Analysis

Opinion Split on Dos Bocas

By Cas Biekmann | Tue, 01/21/2020 - 19:19

Few projects have become a catalyst for so many differing opinions as the Dos Bocas refinery in Tabasco. Since its announcement in late 2018, fierce debate has raged regarding its viability. On the executive side, the intention has been clear: SENER, PEMEX and President López Obrador deemed greenlighting the project an absolute necessity and construction started in June 2019. While ending dates are hardly ever a certainty concerning projects of this scale, PEMEX Director General Romero Oropeza says the envisaged completion in 2022 is likely.

The scope of the refinery, which will be Mexico’s seventh installation and will focus exclusively on heavier crude, makes it a flagship endeavor. Critics fear that construction costs will rise well above expectations, and even SENER’s lower estimations are around US$8 billion. The refinery space will take up 566ha, house 17 processing plants and 93 storage tanks. Production capacity is set at 340,000Mb/d. In one regard, the project is certainly welcome: employment. The construction is creating about 120,000 jobs. Once the refinery is up and running, it will provide 1,300 direct jobs and 6,000 indirect jobs.

Minister of Energy Rocío Nahle argues that Mexico imports 80 percent of its fossil fuels and the refinery will bring much-needed balance to the sector, along with the desired augmented production. Nahle has pointed out that with the new refining capacity, PEMEX will be able to cover 70 percent of national fossil fuel consumption. This would rank the NOC as the world’s 16th-largest refining company. “Investing in our future will bring us toward a new horizon concerning fuels for Mexico,” Nahle.

Nonetheless, the project has attracted a great deal of criticism. Some experts doubt the viability of the proposed budget and the time frames, arguing that the initial budget will not suffice by a long run. That argument received a boost when the government was forced to declare void an international tender to build the refinery because the proposals from foreign companies exceeded both cost expectations and the desired execution period. Other entities, such as The Mexican Employers Federation (COPARMEX) and Mexico’s Institute of Competitiveness (IMCO) have questioned the need for the refinery, with the latter even urging the government to abandon the project entirely.

Regardless of the criticism, López Obrador is convinced that Dos Bocas will be a success. What Nahle calls balance, López Obrador ties directly to the nation’s energy sovereignty: he argues that if the nation wants to recover its energy sovereignty, the focus must be on national production as the sector works to achieve independence from foreign influence. Although it could raise complaints from the private sector, this approach will allow PEMEX to keep more cards in its own hands.

Cas Biekmann Cas Biekmann Journalist and Industry Analyst