MOSCOW (MRC) -- Pemex has sharply reduced crude exports to India, the third largest market for its oil, amid preparations for a new refinery expected to absorb more of its output, reported Reuters with reference to data and people familiar with the matter.
Petroleos Mexicanos in December said it would cut crude exports this year and could suspend them altogether in 2023 as the company works to meet the government's target of refining all of its oil domestically.
Pemex is prepared to sacrifice a large portion of this year's crude sales to Asia, according to analysts and traders, with the expansion of its downstream business. In January, it took complete ownership of the 340,000 bpd Deer Park, Texas, refinery, and agreed to supply it with over 100,000 bpd of its flagship Maya heavy crude.
"Indian refiners that buy Mexican crudes every month are being called to notify them of volume cuts in 2022. Pemex has also turned down requests by refiners trying to sign new contracts," one of the sources said.
Mexico has scheduled only one crude cargo to India for the first two months of the year, which will cut exports to about 15,000 bpd from the almost 98,000 bpd shipped in the same period last year.
Last year, Pemex exported an average of 132,500 bpd to India, according to Refinitiv Eikon Trade Flows data, and worth some USD3.26 B at Pemex's crude market prices to Asia.
Asia is the second most important region for Pemex's crude after North America, with Indian and South Korean refiners leading Asian purchases until last year, according to company and Eikon data.
In India, the main buyers of Pemex's Maya and Isthmus crudes last year were Indian Oil Corporation Ltd (IOC) and HPCL-Mittal Energy Ltd (HMEL), Eikon data showed. Reliance Industries also has been a frequent buyer of Mexico's oil in recent years, one of the people said.
Pemex volumes to IOC could fall to about 22,000 bpd this year, from 40,000 bpd in 2021, one of the people said. Supplies to HMEL and Reliance also have been cut, the people familiar with the matter added.
As MRC wrote previously, in late January, 2022, Pemex signed a long-term crude supply contract with Royal Dutch Shell Plc as part of its acquisition of the Deer Park refinery in Texas. Pemex and Shell in May, 2021, announced the transaction, which is worth almost USD600 MM and will make the Mexican firm the sole owner of the refinery near Houston. The facility has capacity to process 340,000 bpd. Shell will supply about 200,000 bpd of foreign and US crude to the plant for at least 15 years.
Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.
According to MRC''s ScanPlast report, Russia's estimated PE consumption totalled 2,265,290 tonnes in the first eleven months of 2021, up by 14% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 1,363,850 tonnes in January-November, 2021, up by 25% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding PP random copolymers decreased significantly.
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