AMLO Says Mexico to Refine Less Crude and Export More on Rally

(Bloomberg) -- Mexico will refine less of its oil this year to take advantage of an international price rally, putting on hold the nationalist president's goal of producing all of its own fuel at home.

“We launched a new plan because the price of crude oil is high and we are in the process of modernizing the refineries, so we are taking advantage now that the price is high to dedicate more resources and time to the rehabilitation of the plants,” President Andres Manuel Lopez Obrador said during his daily press conference on Thursday.

Mexico will reduce its crude processing to 850,000 barrels a day from a goal of about one million barrels a day, he said. The country processed 846,329 barrels a day of crude in February, and it averaged 711,612 barrels a day last year, according to data from Pemex.

Bloomberg News previously reported that the price rally due Russia's invasion of Ukraine has temporarily delayed Lopez Obrador's plan to halve crude exports as part of his energy self-sufficiency goal. The president, known as AMLO, has sought to reverse the liberalizing reforms of his predecessor and cast off the country's dependence on foreign interests by increasing Mexico's refining output and reducing its reliance on fuel imports.

Higher prices have thrown a spanner in the works, as AMLO has been forced to use the additional revenues from Petroleos Mexicanos's oil sales abroad to offset the higher cost of importing fuel to avoid a gasoline price spike for consumers, known in Mexico as a “gasolinazo”.

AMLO campaigned on a promise to end high electricity and fuel prices for Mexicans by building a new refinery to process more of the country's crude at home and reigning in foreign companies, which he's blamed for overcharging consumers and pillaging the country's oil riches.

The government calculates that it can afford to subsidize fuel with prices up to $155 per barrel without hurting public finances, Finance Minister Rogelio Ramirez de la O told Bloomberg News last week. West Texas Intermediate crude oil for May delivery fell Thursday, trading near $104, but was still heading for a monthly gain.