Pemex delays refinery construction to yearend

Eric Watkins
Oil Diplomacy Editor

LOS ANGELES, Jan. 20 -- Mexico's Petroleos Mexicanos will delay construction of a refinery until yearend while the state firm studies the best location for the plant.

Pemex Chief Executive Officer Jesus Reyes Heroles said the 300,000 b/d refinery will cost $9-10 billion to build, but he noted that costs could fall due to reduced demand for services and equipment.

Pemex announced the refinery plan in mid-2008, and planned to begin preparing the refinery site before yearend 2008.

The company is eyeing nine possible sites for the proposed facility, including Cadereyta, Campeche, Dos Bocas, La Cangrejera, Lazaro Cardenas, Manzanillo, Salina Cruz, Tula and Tuxpan.

Governors of 15 states have been lobbying Pemex to make the investment in their states. The most recent is Tlaxcala state governor Hector Ortiz, who met with Heroles regarding the proposed new refinery, and presented a feasibility study to site the facility in his state.

Last October, President Felipe Calderon said his government would use 12 billion pesos ($853 million) from the country's stabilization fund for investment in Pemex to begin building a new refinery in 2009, the first in nearly 30 years.

Increased refining capacity is considered urgent, as the country has spent almost $12 billion on petroleum product imports in 2000-07 due to a shortage of refining capacity, Pemex said.

Contact Eric Watkins at hippalus@yahoo.com.

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