Is AMLO's legacy in danger? Dos Bocas refinery is technically and financially unviable as it is proposed, says MPI

According to Reforma, the Mexican Petroleum Institute concluded in an evaluation that the Dos Bocas refinery is technically and financially unviable as it is proposed.

The cost of the refinery would be 14 billion 740 million dollars, higher than the 8 billion dollars calculated at the beginning. Photo: CEMDA screenshot
The cost of the refinery would be 14 billion 740 million dollars, higher than the 8 billion dollars calculated at the beginning. Photo: CEMDA screenshot

The document states that without any delay, the cost of the refinery would be 14 billion 740 million dollars, higher than the 8 billion dollars calculated at the beginning.

The IMP proposed two scenarios for the analysis of the refinery with capacity for 340 thousand barrels per day: the first, with a 100 percent investment originated with public resources and the second, with 30 percent of public investment and 70 percent with some type of financing payable in 15 years, at a conservative rate.

Under the first scenario, the refinery is not viable for a period of 20 years of operation.

"Revenue from the sale of products and by-products does not cover the costs of investment, operation, maintenance, and taxes that would be exercised for the operation of the infrastructure in a period of 20 years," the document said.

The only alternative that the IMP proposes so that the project does not generate losses is to reduce the investment to 13 billion 808 million dollars and locate it in Tula, Hidalgo.

In Tabasco, the costs are higher because it would be necessary to invest in conditioning and foundation to support the most robust equipment of the plants, as well as to remove infrastructure that belongs to the Integrated Port Administration (API) of Dos Bocas.

The second scenario has feasibility, but limited.

If private entities with some type of financing are involved in any way, the project must have technical, economic and environmental studies that guarantee the probability of success.

This would imply more time for pre-operational development and reduce the profit margin. The project requires a year of planning and four years of construction, so the refinery would start in 2024. The Secretary of Energy had anticipated that it would be three years of construction.

The document concludes by mentioning that one of the last refineries that have been built in America was Abreu and Lima, in Brazil, an initial joint venture between Petrobras and Venezuela's PDVSA. Started operation in 2014 with a delay of more than 10 years and constant cost overruns.