Inspectioneering
News

Pemex Cuts Oil Supply to India as it Readies New Refinery

Reuters, February 8, 2022
Reuters

Mexico's state-run oil firm Pemex has sharply reduced crude exports to India, the third largest market for its oil, amid preparations for a new refinery expected to absorb more of its output, according to data and people familiar with the matter.

Petroleos Mexicanos in December said it would cut crude exports this year and could suspend them altogether in 2023 as the company works to meet the government's target of refining all of its oil domestically.

Pemex is prepared to sacrifice a large portion of this year's crude sales to Asia, according to analysts and traders, with the expansion of its downstream business. In January, it took complete ownership of the 340,000 barrels per day (bpd) Deer Park, Texas, refinery, and agreed to supply it with over 100,000 bpd of its flagship Maya heavy crude.

"Indian refiners that buy Mexican crudes every month are being called to notify them of volume cuts in 2022. Pemex has also turned down requests by refiners trying to sign new contracts," one of the sources said.

Mexico has scheduled only one crude cargo to India for the first two months of the year, which will cut exports to about 15,000 bpd from the almost 98,000 bpd shipped in the same period last year.

Last year, Pemex exported an average of 132,500 bpd to India, according to Refinitiv Eikon Trade Flows data, and worth some $3.26 billion at Pemex's crude market prices to Asia.

Pemex did not reply to a request for comment.

Asia is the second most important region for Pemex's crude after North America, with Indian and South Korean refiners leading Asian purchases until last year, according to company and Eikon data.

In India, the main buyers of Pemex's Maya and Isthmus crudes last year were Indian Oil Corporation Ltd (IOC) and HPCL-Mittal Energy Ltd (HMEL), Eikon data showed. Reliance Industries also has been a frequent buyer of Mexico's oil in recent years, one of the people said.

Pemex volumes to IOC could fall to about 22,000 bpd this year, from 40,000 bpd in 2021, one of the people said.

Supplies to HMEL and Reliance also have been cut, the people familiar with the matter added.

IOC, HMEL and Reliance did not reply to requests for comment on the volume reductions.

Mexican crudes had gained market share in India through 2021 amid dwindling exports from Venezuela and Iran as Western sanctions choked supplies.

Mexico climbed to the sixth largest crude supplier to India last year, as rivals Canada, Brazil and Colombia also gained share. U.S.-sanctioned Venezuela did not supply oil to India in 2021, the data showed, after holding the sixth position in 2020.

Mexico's President Andres Manuel Lopez Obrador has promised the proposed 340,000-bpd Dos Bocas refinery in Tabasco state will begin producing fuel next year, a key step towards self-sufficiency in one of the world's largest fuel importers.

The country's refineries have 1.6 million-bpd processing capacity, but operate at a fraction of that level due to lack of investment, frequent outages and insufficient light oil to process.


(Reporting by Marianna Parraga and Nidhi Verma; Additional reporting by Adriana Barrera; Editing by Marguerita Choy)

Click here to read the full article from Reuters.

Copyright 2022 Thomson Reuters. Click for restrictions.

Comments and Discussion

There are no comments yet.

Add a Comment

Please log in or register to participate in comments and discussions.


Inspectioneering Journal

Explore over 20 years of articles written by our team of subject matter experts.

Company Directory

Find relevant products, services, and technologies.

Talent Solutions

Discover job opportunities that match your skillset.

Case Studies

Learn from the experience of others in the industry.

Integripedia

Inspectioneering's index of mechanical integrity topics – built by you.

Industry News

Stay up-to-date with the latest inspection and asset integrity management news.

Blog

Read short articles and insights authored by industry experts.

Expert Interviews

Inspectioneering's archive of interviews with industry subject matter experts.

Event Calendar

Find upcoming conferences, training sessions, online events, and more.

Downloads

Downloadable eBooks, Asset Intelligence Reports, checklists, white papers, and more.

Videos

Watch educational and informative videos directly related to your profession.

Acronyms

Commonly used asset integrity management and inspection acronyms.