PEMEX Announces US$12 Billion Spending on Environmental Strategy
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PEMEX Announces US$12 Billion Spending on Environmental Strategy

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Perla Velasco By Perla Velasco | Journalist & Industry Analyst - Thu, 12/15/2022 - 16:47

PEMEX approved an investment of US$11.97 billion to enhance its environmental performance. With the actions contained in its 2023-2028 Business Plan, the NOC seeks to capture 98 percent of its emissions, phase out fuel oil production and increase electricity production via clean cogeneration technology.

The NOC will invest US$3.78 billion to increase the natural gas it captures instead of flaring it to 98 percent. PEMEX currently captures 93 percent of its emissions from its oil extraction processes. According to Bloomberg, PEMEX reported that it reduced its emissions by 30 percent during 2Q22 earlier this year. The company also increased gas capture by 5 percent in comparison to 2021. In 2022, PEMEX received a budget of MX$14.53 billion (US$763 million) to capture 96 percent. In 2021, the company had increased its emissions by 30 percent due to a lack of proper infrastructure maintenance. Experts believe that instructions to prioritize production may have spurred on the NOC’s decision to ignore its flaring track record.

According to the approved business plan, PEMEX will invest US$5.66 billion to stop producing fuel oil. Currently, thirty percent of PEMEX refined production is fuel oil, which results in a US$5/b loss. This is a great challenge for the NOC: Since 2021, PEMEX had planned to drop its fuel oil production to 28 percent by 2H22, 27 percent by 2023 and 17 percent by 2024.

The NOC will build two coker plants in Tula and Salina Cruz that are expected to start working in 2024. According to La Jornada, PEMEX produces diesel with 500 PPM sulfur, but it aims to produce ultra-low sulfur type, with less than 15 PPM sulfur. This would boost PEMEX’s ability to stay in business in the long run, since most oil companies have already established plans for the decline of the oil industry. According to Moody’s, only the companies that can afford to produce in an environment of lower oil prices will survive in the future. In addition, for electricity cogeneration, the council approved a budget of US$2.54 billion. PEMEX aims to reduce 3 million tons of CO2 emissions yearly.

Furthermore, a sustainability committee was approved earlier this week, and a Sustainability Plan is set to be ready by 3H23.

Photo by:   Twitter @Pemex

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