Pemex Seeks More Motor Fuel Imports Due to Refinery Delays

By Stefanie Eschenbacher, Shariq Khan, and Trixie Yap

MEXICO CITY/NEW YORK/SINGAPORE (Reuters) – Mexico is planning to import more motor fuel for the next year than initially intended. This shift comes as a response to delays in launching the new Olmeca refinery, according to six traders, signaling a reversal by state energy company Pemex.

These increased purchases suggest that the refinery’s operational readiness is still far off, casting a shadow over the administration of outgoing President Andres Manuel Lopez Obrador. He commissioned the refinery after his election in 2018 with the aim of reducing costly fuel imports.

Pemex, the world’s most indebted oil company, is a significant crude oil producer. However, it heavily relies on imports for gasoline and diesel due to its aging refineries, which are inadequate to process heavy Maya crude, leading to high fuel oil production instead.

Earlier this year, Pemex had communicated to suppliers its intention to cut fuel imports significantly, anticipating that the 340,000-barrel-per-day (bpd) refinery would finally operate at full capacity. Nonetheless, a recent report indicated that the refinery is not expected to produce commercially viable fuels until at least next year’s fourth quarter.

Despite wanting to reduce imports, Mexico is now actively seeking deals to secure fuel supplies for the upcoming year, making inquiries in the U.S. and Asia. Traders revealed that Pemex is looking to import similar volumes to what they previously did.

Efforts to establish new supply deals for 2025 would contradict statements from Pemex CEO Octavio Romero, who claimed imports would drastically decrease soon. He previously indicated that the Olmeca refinery would start operations imminently and that new coking units in Tula and Salina Cruz would increase Pemex’s production beyond national demand.

In the initial five months of the year, Pemex produced 306,547 bpd of gasoline and 181,565 bpd of diesel while importing more: 358,545 bpd of gasoline and 128,215 bpd of diesel.

Spot Purchases Amid Delay

Should the new refinery fail to operate at full capacity, inadequate imports could lead to a fuel shortage next year, potentially embarrassing the government and the incoming President Claudia Sheinbaum.

The government and Pemex have postponed the refinery’s startup date multiple times, with costs spiraling over $17 billion. Generally, Mexico imports most of its fuel from the U.S., as shipping from Asia is more time-consuming and expensive, though price variations in Asia can sometimes make it worthwhile.

Recently, Pemex secured at least three spot purchases of around 300,000-barrel gasoline cargoes for early August loading from Asia, likely sourced from China and Singapore. Nevertheless, establishing contractual term shipments from Asia remains a challenge, as profitability must be maintained throughout the entire shipping period.