Mexico's state-oil company Pemex requested this week almost USD6.5 bn in additional funding from the government to pay for works at the"'Dos Bocas" refinery this year, according to a document and two sources familiar with the matter, said Reuters.
The additional funding is to cover works not initially included in the project's proposal, higher construction and startup costs, according to the document and sources. Mexican President Andres Manuel Lopez Obrador considers the new refinery a signature project and has argued it will help the country cut a longstanding dependence on gasoline and diesel imports.
The additional funding would take the refinery's price tag to USD14.6 B, the documents and the sources said, far above the original budget of USD8.9 B. The document, seen by Reuters, cites higher costs for building "associated" components in infrastructure needed to operate the refinery as the main reason for the increase.
Petroleos Mexicanos' (Pemex) board approved - by a majority but not unanimous vote - to request USD5.6 B from the government to continue the works, as well as USD853 MM for costs associated with the start-up of the Olmeca refinery, commonly known as Dos Bocas after the area where it is being built.
Pemex will own and operate the refinery, Mexico's eighth. Pemex, Mexico's finance ministry and energy ministry did not immediately respond for a request for comment. Up until June, USD10.3 B had been spent on the refinery, the document showed.
In April, sources close to the project told Reuters the refinery would cost at least USD14 B while other reports have put the final price tag several billion dollars higher. Lopez Obrador said in June the refinery would end up costing significantly more than the USD8.9 B that had been approved initially. At the time he estimated a price tag of USD11 B and USD12 B.
We remind that n 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.
mrchub.com