Mexico’s New Pemex Refinery Is Far From Ready, Sources Say

Mexican state energy company Pemex is unlikely to produce any commercially viable motor fuels at its new Olmeca refinery before the end of the year, five sources said, despite pressure that it should be ready before the outgoing president's term ends.

President Andres Manuel Lopez Obrador, a resource nationalist, inaugurated the 340,000-barrel-per-day refinery in July 2022 in his home state Tabasco, billing it as crucial to energy self-sufficiency for Mexico.

However, delays at the refinery in the port of Dos Bocas, whose cost has more than doubled to $16.8 billion, means it will be up to his successor Claudia Sheinbaum to try to make the dream a reality when she takes office on Oct. 1.

As recently as last Thursday, Pemex CEO Octavio Romero insisted during an industry event the refinery would "work at full capacity next month."

Now, five sources familiar with the operations told Reuters that it was impossible to meet these targets and that progress had been exaggerated ahead of the June presidential election.

Neither Pemex nor the president's office responded to requests for comment.

Two sources with detailed knowledge of the operations said engineers were still working on individual parts of the refinery and will then face the even bigger challenge of linking them.

One of the sources, an engineer, described this last step as a hugely complex and "agonizing" process of trial and error that takes months.

The other source, also an engineer, said that in the most optimistic scenario the first of two production lines of the refinery would be ready between October and November.

"Technically and operationally, the refinery is fine so far but the problem is the expectations that have been created," the source said.

He added that the information shared publicly by officials "doesn't take into consideration more technical criteria" around how a refinery works.

Pemex officials had sought to demonstrate the refinery was operational by bringing a cargo of high-sulfur diesel to the Olmeca refinery to be turned into ultra-low-sulfur diesel but this was not produced from crude oil as is the plan.

Parts that still need work include the fluid catalytic cracking plant, where heavy petroleum fractions are converted into lighter products, and the hydrodesulfurization plant where sulfur is removed under high pressure and high-temperature.

Another challenge for engineers will be the coker plant that converts and processes residual fuel oil, the source said.

(Reporting by Adriana Barrera, Stefanie Eschenbacher and Ana Isabel Martinez; Editing by Stephen Eisenhammer and Marguerita Choy)