Mexico's Largest Refinery Set to Restart at a Third of Capacity

(Bloomberg) -- Mexico's largest refinery is expected to restart this week at third of its capacity, but the country's appetite for imported fuel isn't likely to go away anytime soon.

The Salina Cruz refinery in the southern state of Oaxaca, which went offline after a deadly fire June 14, will begin processing 110,000 barrels a day of crude this week, a spokeswoman for state-owned Petroleos Mexicanos said in an email. She asked not to be identified, citing company policy. The loss of the 330,000 barrel-a-day plant took the country's refining production to the lowest level in decades and forced Mexico to ramp up fuel imports.

“We expect the restart of the refinery to be gradual,” said Ixchel Castro, senior analyst at energy consultant Wood Mackenzie in Mexico City. “Imports will decline gradually in August and not return to levels seen before the fire until September. Without any other major events, September and October should have the lowest gasoline imports of the year before they increase again as the winter season approaches.”

The Pemex spokeswoman didn't provide an estimate for the refinery to reach full capacity. It was running just below 200,000 barrels a day in May, the month before the fire, according to data from Mexico's energy information agency.

Unplanned outages have plagued Pemex's aging refineries in recent years, underscoring Mexico's vulnerability to fuel shortages. The country's refining production dropped to as low as 819,600 barrels a day in June, the least this year, data from the energy information agency show.

Overall, Pemex refined 695,000 barrels a day of crude, equivalent to about 42 percent of Mexico's refining capacity, July 1 to July 16, according to preliminary data from the company. The last time output was that low was in December 1990.

The work on Salina Cruz included the addition of a new pump house able to handle 451,000 barrels a day of crude for processing and 376,000 barrels for export, the spokeswoman said.

To contact the reporter on this story: Amy Stillman in Mexico City at astillman7@bloomberg.net.

To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Margot Habiby, Mike Jeffers