Rocío Nahle, who took the leadership of the project three years ago, has refused to give a specific date for the start of operations of the Olmeca refinery. In a recent radio interview, the official described as “irresponsible” to say a date for the complex to begin adding production to Pemex and has said that the term will be defined based on security protocols. “We want the integration and testing and start-up to be as soon as possible, but that will be determined by security,” she said Thursday.
According to a count by the Ministry of Energy itself, the president will inaugurate a complex that already has 90 storage tanks completed with a capacity of 15 million barrels, 17 process plants, critical equipment and administrative offices. “A world historical record was broken because nobody builds a terminal of this size in 18 months,” it has been said regarding the refinery’s storage infrastructure. The president will give a report this Friday in which the detailed status of the largest presidential project in energy matters will be announced.
The progress of the construction of the project has been almost impossible to follow. The federal administration has not made public information or documentation of expenditures available. The only possibility of access to the advances has been through an informative video recorded by the Nahle secretariat each week. In his latest videos, he placed the progress of the work at more than 85%. But an analysis by the Citizen Energy Observatory, at the end of May, places the real progress of the work in barely 65%.
That same document ensures that the installation of pipes to interconnect the process plants and mechanical equipment, the completion of drainage and wiring, among other points, is still pending.
The administration avoided registering the work as an economic infrastructure project and this has prevented knowing the degree of progress of the construction and the investment that has been allocated. From the beginning, Pemex classified the Olmeca refinery business case as confidential and PTI Infraestructura de Desarrollo, the Pemex subsidiary created for the construction of the work, has no obligation to make transparent the use of resources that have been assigned to it.
Access to the refinery has been restricted, almost on a par with transparency in project information. From the outside –beyond a metal fence and a natural mangrove border, if you look at it from the river– only dozens of workers, machinery and large iron structures can be seen in the distance. On the other side, the storage tanks already look practically ready, with the logo of the state-owned Pemex painted on the face that faces the street, where the employees who build the complex walk.
The administrative offices do look practically ready. But the picture as a whole is far from looking like a refinery with little time left to start operations.
When does the construction of the Dos Bocas refinery end?
The president has said that the start date for fuel production at the Olmeca refinery will not be after the end of this year or the beginning of the next. The latest business plan of the state company sets the start of operations of Dos Bocas for 2023 and an analysis by the Citizen Energy Observatory says that the complex could operate at 60% until the end of next year or in 2024.
The most optimistic forecast comes from the presidency, but analysts doubt that it will be fulfilled. “For political purposes, gasoline and diesel production could begin, as a first stage, starting the combined plant, the hydrogen plant, the diesel, intermediate distillate and naphtha hydrodesulfurization plants and the reforming plant on the process side” says a document from the Citizen Energy Observatory, signed by Alejandro Villalobos Hiriart, a former official of Pemex and the Mexican Petroleum Institute.
A recent agency report Reutersciting sources from the state company, assures that the Secretary of Energy has established internally that “in the best of cases” the refinery operating at 80% capacity by the end of 2025when the six-year term of President López Obrador would have already ended.
State sources assure that some companies have contracts that run until 2024. Employees working on the construction site somewhat confirm the version: most of them do not have a long-term contract, but say that they have been promised work until the end of this year or until next summer, and in that they are basing their plans. All those interviewed agree that the refinery is far from being finished.
The delay in the works has not surprised. Analysts and rating agencies said they were incredulous about the term and the amount set from the beginning. “The history of the projects in Latin America and the same history of Pemex with the reconfiguration of its refineries and its lack of experience already told you that this would happen,” says John Padilla, the director of the IPD Latin America consultancy.
Pemex had no experience building refineries. He opened his last complex in 1979. But the president gave him the task after the companies he invited to bid to build the project put the cost at around $12 billion, with a completion date of around 2026. That was the first sign that the presidential plans were perhaps too optimistic.
“Given the government’s (and Pemex’s) lack of experience in building refineries, the project is likely to end up costing more and take longer than the government anticipates, which creates greater pressure on fiscal resources,” Moody’s said in a May 2019 note. A few months later – in September – the abandonment of the KBR company from the project added more doubts about the project.The American company left two contracts for obtained –for more than 2,000 million dollars– because the costs projected by the federal government doubled, according to the newspaper Reform.
What at first was a rumor has been confirmed a few days ago by the president: the cost of 8,000 million dollars has already been exceeded. López Obrador said in one of his morning conferences that the work could cost up to 12,000 million dollars – what was initially projected by private companies – and Bloomberg, based on sources consulted, has said that the cost of the Olmeca refinery it was already above 18,000 million dollars and has left open the possibility of a new increase.
The refinery is just one part of the administration’s energy policy, which includes limiting crude oil exports and boosting production. The president will inaugurate this Friday the emblematic work that has become the flagship symbol of what he calls energy sovereignty. But the operation, profitability and viability of the project –and its energy policy– still cannot be added to the list of promises made four years agowhen he won the presidency.