AMLO to invest $2.6 billion to modernize Mexican refineries

AMLO to invest $2.6 billion to modernize Mexican refineries

Mexico’s president-elect Andrés Manuel López Obrador stated on Monday, August 13 that his administration is planning to invest about $2.6 to modernize Pemex’s six Mexican refineries. This move is part of a strategy to reduce growing fuel imports.

The future president, set to take the reins Mexico’s government on December 1, stated that the estimated cost to build a new refinery, which should be completed in three years, is 160 billion pesos ($8.4 billion).

During his presidential campaign, the politician, commonly known as AMLO, promised to build two small refineries. This was part of his strategy for the sector, which he says has deteriorated due to corruption. AMLO promises to banish these corrupt practices, according to Reuters.

López Obrador did not specify whether these plans to invest in refineries will be fully financed by the State.

Status of Mexican refineries is forcing the country to import fuel

Pemex’s six refineries are operating at 40 percent of their capacity of 1.6 barrels per day. Meanwhile, gasoline and diesel imports have skyrocketed over the past months. This situation has been aggravated due to scheduled and non-scheduled shutdowns. As a result, the refineries have been operating at a loss for years.

The state-owned company sustains that decreased crude processing is part of a strategy for profitability. For his part, AMLO says that he will increase fuel production to reduce imports in approximately three years.

On the other hand, the president-elect said he expects to invest about $4 billion in “well-drilling and increasing crude production” in Veracruz, Tabasco, and Chiapas. Said investment would be earmarked for onshore fields in the shallow waters of the Gulf of Mexico. The strategy is aimed at increasing ailing hydrocarbon production.

Pemex’s production has consistently decreased over the past years, standing at under 2 million bpd; after reaching a maximum of 3.4 million barrels a day in 2004.

AMLO has also assured he will review hundreds of contracts awarded for crude exploration and exploitation three years ago.

For more information, check Energía16

See also Moody’s: AMLO’s new energy agenda to create credit risk for PEMEX

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