More than five years after the ambitious initiation of the Dos Bocas refinery, Mexico's state-owned oil company, Petróleos Mexicanos (Pemex), is grappling with significant operational challenges. The project, deemed the largest oil refinery in the country, is still incomplete and has become one of the most expensive undertakings during former President Andrés Manuel López Obrador’s administration.
During a press conference back in 2019, Rocío Nahle, then the Secretary of Energy, presented bold plans to complete the refinery within three years at a budget of $8 billion. Fast forward to today, the costs have surged beyond $20 billion, raising questions about the feasibility of López Obrador’s promises of energy independence. More critically, the refinery, inaugurated to much fanfare, remains non-operational for commercial fuel production.
The urgency surrounding the completion of the Dos Bocas refinery has intensified recently due to external pressures from the United States. President Donald Trump has hinted at imposing tariffs on Mexican imports, including crude oil, which exacerbates the urgency for Mexico to stop relying on U.S. fuel.
Claudia Sheinbaum, the current president, has redoubled efforts to achieve 'energy sovereignty'—a vision supported by the administration but now compounded by the operational and financial realities at Pemex. The company struggles under nearly $100 billion of debt and is urgent to revive dwindling production levels.
According to reports, Pemex is experiencing problems integrating various subsections of the refinery, which have been managed by different contractors. The onset of these challenges is reflected by the closure of Dos Bocas, primarily attributed to quality control issues with the crude oil needed for fuel production. “We are far from the rhetoric of Dos Bocas matching reality,” remarked Pablo Zárate, energy analyst at FTI Consulting.
The decision to adopt old designs for the refinery has led to severe problems. “Dos Bocas has continued to face problems due to design failures and the absolute mistake of skipping the FEED phase,” noted Bernardo Del Castillo, CEO of Soteria Consulting. The FEED phase is instrumental as it helps to control project expenses prior to construction. Borrowing plans from previous, unsuccessful refinery projects has proved to be detrimental, especially since these designs were not suited for Dos Bocas’ unique environmental challenges, such as humidity and lower altitude.
Technical difficulties have compounded the situation. The refinery has faced various downtimes, including issues related to its outdated technology where if one part fails, the entire system can shut down. “Pemex did not deploy the most modern technology during the construction,” stated John Padilla, managing director at IPD Latin America, highlighting the potential for continued operational stops.
Despite these setbacks, there are optimistic sentiments around the refinery’s long-term capabilities. At full operational capacity, the facility is projected to process 340,000 barrels of crude oil each day, generating 170,000 barrels of gasoline and 120,000 barrels of diesel. This achievement could significantly reduce Mexico’s dependence on imported fuels, which currently exceeds half of its gasoline consumption.
Nevertheless, as of late December, Dos Bocas was processing only 17.5% of its intended capacity, primarily producing ultra-low sulfur diesel from already refined stocks. While imports of diesel and gasoline have decreased as local production rises, the nation’s distance from fuel self-sufficiency is glaring.
Investment analysts and insiders express skepticism about the plant’s ability to meet its original production targets anytime soon. “Mexico needs to seek alternatives for sending crude oil to the U.S. and reimporting fuels,” Zárate advised, indicating the likelihood of increased reliance on international markets if operational issues are not resolved.
The confluence of operational inefficiencies, financial strains, and regulatory uncertainties highlights the Mexican government’s fight to achieve energy independence via the Dos Bocas refinery. Future outcomes remain uncertain as Pemex navigates its way through numerous hurdles.