Bidding documents to build the first new refinery in Mexico in decades could be released as soon as next week, Mexican Energy Minister Rocio Nahle said during a visit to Houston.
Speaking at CERAWeek by IHS Markit on Wednesday afternoon, Nahle said Mexico has a “severe dependence” on foreign fuels and now imports 80 percent of its gasoline and diesel.
Appointed by President Andres Manuel Lopez-Obrador and taking office in December, Nahle said the administration’s goal is to increase production at six aging refineries owned by Mexico’s state-run oil company Pemex and to build a new refinery that will process up to 340,000 barrels of crude oil per day.
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Maintenance contracts to get the six aging refineries back up to 70 percent processing capacity will be issued later this year but President Lopez-Obrador could personally announce the bidding documents for the new refinery as soon as next week, Nahle said.
“We have six years to work on this, so we’ll have to work rapidly and quickly,” Nahle said. “The more one waits on a project, the more it costs. We want to develop it as soon as possible.”
Under Mexican law, a president serves a single, six-year term. The government, she said, expects to receive bids from most experienced refinery builders around the world and will move quickly in awarded the contract.
“We will be selecting the best from among them,” Nahle said.
One of the goals of the refinery contracts, Nahle said, is to make gasoline prices more affordable. Gasoline prices in Mexico are typically higher than those in the United States. Some have turned to fuel theft, which has caused accidents that claimed hundreds of lives over the last 10 years.
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As part of its historic 2014 energy forms, Mexico removed state price controls on gasoline and diesel and it also opened its market to foreign ownership and competition.
Before the reforms, all gas stations in Mexico could only sell Pemex-branded gasoline and diesel but that has changed. In addition to Mexican-owned companies such as Oxxo opening gas stations that compete with Pemex, a number of foreign companies such as ARCO, BP Chevron, Shell, Exxon and Sunoco are now selling gasoline and diesel under their own brand names south of the border.
Nahle assured that free-market prices for gasoline and diesel will remain and that fuel contracts signed under the previous administration will still be honored.
“Here in the United States, if the price of oil goes down, so does the price of gasoline but in Mexico, it’s not that way,” Nahle said. “It’s that way because we have not maintained a stable and competitive market. It lacks flexibility and that’s a responsibility of the state. That’s something that we’re fixing. It’s priority for our government.”
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