Will Mexico’s New Olmeca Refinery Achieve its Targets?

Mexican state-owned oil company Pemex’s CEO, Octavio Romero said on Jan. 4 that the country’s new Olmeca refinery is estimated to be producing a combined 274,000 barrels per day of gasoline, diesel and jet fuel by the time President Andrés Manuel López Obrador leaves office in September. How likely is the Olmeca refinery to achieve that target, considering scheduling setbacks that it has already faced? How important is the new refinery to Mexico’s energy needs? To what extent can the refinery help strengthen the finances of Pemex, the world’s most indebted oil company?

 Heidi Smith, professor in the Economics Department of Universidad Iberoamericana in Mexico City and Gabriel Farfan Mares, president and managing director of the Mexican Community on Public Management for Results: 

“The launch of the Olmeca refinery will mark a pivotal moment for Pe- mex’s production processes, representing a strategic shift aligned within the National Refinery System. This comprehensive system, including the Salina Cruz and Tula coking plants and the Deer Park refinery, underlines the government’s optimistic outlook, project- ing a substantial increase in gasoline, diesel and jet fuel production by 2026. This, in addition to Pemex’s ambitious target of 7.4 billion barrels of crude oil equivalent by 2024, signals a 6 percent increase in the nation’s hydrocarbon output since 2019. This robust performance underscores the effectiveness of Pemex’s operational strategies, incorporating contributions from both emerging and established fields. An essential metric reflecting efficiency and cost-effectiveness is the reduction in the cost of developing

The launch of the Olmeca refinery will mark a pivotal moment for Pemex’s production processes...”

— Heidi Smith & Gabriel Farfan Mares

hydrocarbon reserves. This declining cost signifies Pemex’s dedication to optimizing resource utilization and streamlining produc- tion processes. Another noteworthy aspect is the substantial contribution that the Deer Park refinery has made since 2022. The upcoming operationalization of the Olmeca refinery is anticipated to mirror this impact. These developments underscore a concert- ed effort to enhance self-sufficiency and for- tify the nation’s energy independence, which, in essence, outlines a positive trajectory. The focus on new fields, fostering private partnerships and ensuring cost efficiency position Pemex favorably for sustained growth in the hydrocarbon sector.”   Published in  https://www.thedialogue.org/energy-advisor/