Possible Import Cancellations on the Path to Self-Sufficiency

Mexico is attempting to cancel its orders of US gasoline as the country experiences plummeting demand. Meanwhile, President Andrés Manuel López Obrador has stated that he has a plan for refining sovereignty, meaning Mexico will not have to sell a single barrel of oil abroad to later import it again as gasoline.

Mexico’s plummeting retail and industrial demand means that there is nowhere for gasoline imports to be stored in the country, nor is it needed. ONEXPO reports that sales at gas stations fell 70 percent year-on-year during the first weeks of April.

Due to this situation, El Financiero is reporting that PEMEX’s international trading arm, PMI, has incited force majeure measures to stop imports scheduled to arrive to Mexico. Unfortunately, many of those vessels are already in Mexico waters. According to the news outlet, there are some 60 vessels stranded off both coasts, waiting to be told what do with their cargo. Eric Tapia, an independent oil consultant and former employee of PMI, estimated the total cargo waiting to enter Mexico to be 18MMb of gasoline.

The Mexican administration is making bold claims. On Friday, President Andrés Manuel López Obrador said that the government “had a plan” that would allow the country to achieve self-sufficiency so as not to sell crude abroad in the future for refining. The US$8 billion Dos Bocas refinery is the centerpiece to a revamp of the entire National Refinery System, but with construction barely having begun and the other refineries of the SNR collectively working far below half capacity, self-sufficiency in refining seems a long way off yet. According to El Financiero, Mexico imports 65 percent of its gasoline every year.

On Thursday, Mexico’s oil and gas authority CNH met and granted approval for Shell to speed the development of its deepwater Block 3 asset, including the drilling of an additional exploratory well. The block, won in Round 2.4, sits 12km off the Tamaulipas coast in the Cinturón Plegado Perdido region. The base outlay for the exploratory well is US$14.7 million, El Financiero explained. Three other wells were approved for PEMEX, Repsol and Pantera, a subsidiary of Jaguar E&P.