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Pemex Refinery Stoppages Hit All-Time High Under AMLO

The number of stoppages in Mexico’s state oil company’s six processing plants are up 23% year-on-year.

Pemex workers at the Cadereyta refinery.
December 16, 2021 | 07:43 pm

Mexico City — Pemex refineries have registered the highest number of stoppages this year since the start of President Andrés Manuel López Obrador’s six-year term in December 2018.

From January-November 2021, stoppages in the processing plants of the state oil company’s six refineries totaled 363, a 23% increase over the same period of 2020 according to statistics from the Energy Ministry (Sener).

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The Mexican government aims to increase the country’s refining capacity to achieve self-sufficiency in gasoline and diesel, but by increasing the amount of crude to be processed, the plants’ machinery has suffered failures.

There is a correlation between the processing of oil and the number of stoppages. For example, refining capacity increased to 863,000 barrels per day (53% of capacity) during February. In that same month, the company suffered 57 stoppages, the highest monthly figure this year. Similar scenarios occurred in July and August.

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“What we see is that the greater the capacity of the refineries, there is a larger number of stoppages,” Ramsés Pech, an analyst at consultancy Caraiva y Asociados, told Bloomberg Línea by phone.

Mexico’s Energy Minister Rocío Nahle García, who is in charge of the refinery refurbishment project, has been attempting to raise capacity to one million barrels per day since 2019, but without success, in part due to the increased production of gas-oil, a highly contaminant oil derivative that is of less value than crude.

Pemex has been carrying out preventive maintenance, such as repairing filters or painting installations, but not on obsolete equipment that is more important for stable operations, such as catalyzers and tubing, according to the analyst.

“There is more corrective maintenance, but not preventive,” he added

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During her appearance before the Senate on December 6, Nahle said that 49 major repairs have been carried out this year as part of the refurbishment program, 118 repair works have been concluded and some that are currently under way will be completed in December.

She said there were plants that were out of service for up to 35 days due to a complete refurbishment and equipment changes, and which included putting processing plants back into service that had been idle.

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“The corrective maintenance works planned for this year are 97% complete in this first stage,” she told senators.

An example of corrective maintenance is the plan to complete the coking plant at the Miguel Hidalgo refinery and to reduce production of gas-oil and produce more gasoline, diesel and kerosene at the Tula and Salamanca refineries.

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Pemex’s CEO Octavio Romero Oropeza said in May that the works would cost $2.64 billion and be completed in 2024.

On December 1, López Obrador said that with the refurbishment of the country’s six refineries, Pemex would have the capacity to refine 1.2 million barrels of crude per day by 2023.

Nahle said that over the past three years the government has channeled 25.13 billion pesos ($1.2 billion) into ramping up fuel production in the country’s refineries. “If they didn’t achieve that in three years, how are they going to achieve it now with the same amount of money?” the analyst asked.