AMLO’s obsession with oil is going to backfire on him as soon as next year

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Mexican President Andres Manuel Lopez Obrador’s push to make Mexico self-sufficient in gasoline and diesel risks bringing back as early as next year crude imports that the president once lambasted.

State-owned producer Petroleos Mexicanos estimates oil supply deficits of 47,000 barrels a day in 2023 and 97,000 in 2024 due to additional crude-processing capacity at its Cangrejera plant, according to company documents seen by Bloomberg. That’s despite the company’s forecast that oil production will jump 14% to 2 million barrels a day as early as December, the documents show.

In a Dec. 28 presentation, the company said “necessary adjustments would be made to meet demand” over the next two years to offset the crude supply deficits.

Lopez Obrador’s office and Pemex didn’t immediately respond to requests for comment.

Lopez Obrador has made energy independence a centerpiece of his nationalist agenda. In an attempt to ensure Mexico has enough crude to make all the gasoline and diesel it needs, his government plans to stop exporting oil next year.

Importing oil to make fuel would be a first for the country since 2018 when a purchase of oil from the U.S. under Mexico’s previous administration was strongly criticized by Lopez Obrador.

He said on Twitter at the time that the 1.4 million-barrel import of Bakken crude from U.S. refiner Phillips 66 was “an example of the great failure of neo-liberal economic policies in the last 30 years.”

Now, his export halt risks making Mexico a net importer of crude because Pemex doesn’t have the oil volumes necessary to meet the country’s fuel consumption, Moody’s Investor Service analyst Nymia Almeida said in an interview last week. Pemex imported about 60% of the gasoline it sold in Mexico last year.

So in seeking an end to fuel imports, Mexico may need to import oil at least temporarily.

Pemex plans to expand crude-processing capacity at its Cangrejera plant by 312,000 barrels a day in 2023, and it’s also incorporating two new plants into the national refining system next year — the Dos Bocas facility under construction in Tabasco state and the Deer Park refinery near Houston — with a combined capacity of more than 650,000 barrels a day.

The company aims to raise refinery utilization rates to 86% in two years, a major feat considering that the last time utilization rates were above 50% was in 2016. Its existing six refineries averaged 44% of capacity last year, according to data on Pemex’s website.

Source: El Financiero

Mexico Daily Post