PEMEX Discusses Water in Crude Exports

US refiners are rejecting shipments of Mexican crude due to rising concerns over high water content, forcing them to turn to alternative sources such as Colombia and Canada. PEMEX’s CEO Víctor Rodríguez acknowledged the quality issues, attributing them to temporary factors. 

“It is a situational problem that is already being addressed and will not affect exports to the United States,” he said during a press conference alongside President Claudia Sheinbaum. Rodríguez stated that while complaints from buyers have been ongoing since December, no shipments have been rejected, and the issue is under control.

Refiners in Texas and Louisiana have complained that PEMEX is delivering crude with water levels reaching up to 6%, significantly above the industry standard of 1%. This translates to around 30Mb of water in a standard 500Mb cargo, amounting to nearly US$2 million in lost value per shipment, according to Bloomberg.

Quality concerns come as PEMEX struggles with financial and operational challenges, including a US$20 billion debt to suppliers of chemicals and equipment needed to improve crude quality. Meanwhile, US crude imports from Mexico dropped to 149Mb/d in the last week of January, the lowest level since 2010, according to the US Energy Information Administration (EIA).

The issue is also affecting PEMEX’s domestic refining operations. Mexico’s largest refinery, Dos Bocas, has been offline since mid-December due to crude quality concerns, with reports indicating that high salinity in the oil could damage the facility. Sheinbaum downplayed the severity of the problem, stating that weather conditions contributed to the quality issues and that chemical treatments are available to address them.

The decline in Mexican crude exports to the US and the need for alternative sources have driven up prices in the Gulf Coast refining market. With US refiners seeking replacements, Canadian and Colombian crude shipments have increased, reshaping traditional supply routes in North America.