Pemex Keeps More of Its Crude in Mexico as Refineries Ramp Up

(Bloomberg) -- Pemex is producing more gasoline and diesel at its six refineries across Mexico, reducing fuel imports and leaving less oil available for export.

In the first three months of the year, Mexico's refineries processed 21 percent more crude than a year earlier, according to a company presentation. The increase has largely come from crude that was previously being sent to Asia and the U.S. According to government data, exports of Isthmus medium crude fell 57 percent over the period, while total crude exports were down 3.6 percent.

“Isthmus exports have fallen and that trend should continue if Pemex's rise in utilization rates is maintained,” said Ixchel Castro, senior analyst at energy consultant Wood Mackenzie in Mexico City. “We can still expect shipments to Asia and the U.S. but at volumes much lower than what we saw the second half of last year.”

After Pemex's fuel output sank in 2016 to the lowest level in 26 years, the company pledged to invest more in its refineries this year. Crude processing has rebounded following the completion of maintenance at the end of 2016 and the recovery of prices for refined products, Pemex said in a presentation on its website.

Higher Prices

The state-owned oil company has benefited from the government's change in policy to bring fuel prices in line with international rates. The new policy, which became known as the “gasolinazo,” or fuel price slam, pushed up pump prices by as much as 20 percent at the start of the year and led to riots and blockades at some fuel terminals.

The country's refineries processed almost 950,000 barrels a day in the first quarter of 2017, and Pemex has pledged to raise output to about 1.1 million barrels a day by April. Gasoline imports, which fell 11 percent from the previous quarter, were up 23 percent from a year ago. U.S. refiners such as Valero Energy Corp. and Phillips 66 are looking to export more fuel to Mexico and the rest of Latin America as domestic consumption levels off.

Pemex aims to further increase gasoline and diesel production by seeking partners for its refinery projects, including a coker at the Tula refinery in Hidalgo state. “We expect to have a partner toward the end of the year, hopefully in the next three to four months,” said Carlos Murrieta, Pemex refining head, on a Wednesday call with investors.

--With assistance from Adam Williams

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, Richard Stubbe