Mexico's gasoline independence dream sinks in dirty fuel oil glut

Mexico's president took office in late 2018 pledging to boost local output of gasoline while phasing out imports, but so far state refineries have instead set a different course: bumper production of highly contaminating fuel oil, said Hydrocarbonprocessing.

To make Mexico self-sufficient, leftist resource nationalist President Andres Manuel Lopez Obrador wants the country to wean itself off dependence on foreign gasoline and diesel supplies, mostly from U.S. refiners, and replace them by 2024 with production from state oil company Petroleos Mexicanos (Pemex).

The push to increase Pemex's output, however, has ramped up fuel oil production, due mostly to its refineries' struggle to efficiently process the heavy crude Mexican oil fields pump. Some Pemex executives describe Lopez Obrador's promise as more ideological, and less tethered to technical realities.

"It's really more of a political statement than a reachable goal," one Pemex executive told Reuters, speaking on condition of anonymity to candidly discuss the quandary. Pemex did not respond to requests for comment.

In April, Pemex fuel oil production averaged over 322,000 barrels per day (bpd), the highest since July 2010 - even though the company's total crude output is now over a fifth lower than it was during 2016, official data show. By contrast, gasoline output was 291,000 bpd in April. While over 40% higher than the 2019 average, the figure is down 4% from April 2022, and over 10% below the 2016 average.

We remind, Mexico's northern state Nuevo Leon on Sunday warned that it would seek penalties for state oil company Pemex after a dramatic increase in visible emissions from its Cadereyta refinery earlier in the day. Video footage posted on social media, including by State Governor Samuel Garcia, showed thick, yellow and black smoke billowing from flare stacks - meant to burn off only small volumes of excess natural gas.


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An Indian agency has stepped in to provide safety certification for most of Gatik Ship Management's fleet, a major carrier of Russian oil to India, after Lloyd's Register and the American Bureau of Shipping (ABS) withdrew classification for many of its vessels, records show, said Reuters.

Mumbai-based Gatik, which has emerged this year as a significant player in Russian oil transport, also recently reflagged at least four of its vessels to Mongolia, according to data from maritime platform Lloyd's List Intelligence.

This followed the de-flagging of 36 of the Gatik-managed fleet by St. Kitts & Nevis International Ship Registry. However, Indian Register of Shippping (IRClass) data showed six vessels being reflagged to Mongolia. Other Gatik ships were recently reflagged to Gabon.

Classification societies such as London-headquartered Lloyd's Register (LR), ABS and IRClass provide services including seaworthiness checks, certification that is vital for securing insurance and entry to ports. IRClass, which is recognized globally, did not respond to requests for comment.

As Western sanctions on Moscow's energy trade tightened, Gatik suddenly stepped in with a fleet of tankers that has numbered more than 40, shipping data shows. India, which does not recognize the sanctions, has quickly become the biggest buyer of seaborne Russian crude since Moscow's invasion of Ukraine in February last year.

The reflagging of vessels and changes of registry highlight the tightening oversight by Western service providers over supply of Russian oil, but also the limitations of such efforts given the ease with which ship owners and operators can find new documentation to continue sailing.

While non-EU countries can import seaborne Russian crude, Western shipowners and insurers are prohibited from handling such cargoes unless they are sold at or below USD60 a barrel cap.

"As a U.S. company, ABS strictly follows both the letter and the spirit of U.S. and other applicable sanctions. We are arranging the transfer out of class of all vessels formerly managed by Gatik," a company spokesperson told Reuters.

The spokesperson added that 13 vessels were being dropped from ABS certification. Gatik did not respond to requests for comment. About three dozen Gatik ships have obtained certification from IRClass since mid-March, the IRClass data showed.

The IRClass data also indicated that most of these ships are managed by Indian firms including Gaurik Ship Management, Geras Ship Management, Caishan Ship Management, Galena Ship Management, Zidan Ship Management and Plutos Ship Management.

No details about the companies could be found on the Indian corporate affairs ministry's website and the companies did not respond to emails seeking comment. However, according to shipping database Equasis, the companies handle safety and environmental-related issues of the vessels while commercial operations are managed by Gatik.

Lloyd's Register has said it will withdraw certification of 22 of Gatik's vessels by June 3, Reuters has reported. Major U.S. ship insurer American Club also told Reuters previously it was no longer providing cover for Gatik ships, while Russian insurer Ingosstrakh said it would not work with Gatik in future.

India's ship certifier is one of the 11 members of the International Association of Classification Societies, which also includes ABS and LR, that account for more than 90% of the world's cargo-carrying tonnage.

We remind, Russia is leaning towards leaving oil production volumes unchanged ahead of an OPEC+ policy meeting on June 4 because Moscow is content with current prices and output. OPEC+, which groups the Organization of the Petroleum Exporting Countries with Russia and other allies, surprised the market on April 2 with further output cuts that pushed up the price of oil.

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Oil prices edged up on Wednesday after steep losses in the prior session, as market participants awaited an expected vote on a bipartisan deal to lift the USD31.4-T U.S. debt ceiling, said Reuters.

Brent crude futures for August delivery rose 11 cents to USD73.82 a barrel by 0013 GMT, while U.S. West Texas Intermediate crude (WTI) gained 8 cents to USD69.54 a barrel. Both fell more than 4% on Tuesday. Brent's July contract, which expires on Wednesday, and the U.S. benchmark were on track for monthly declines of more than 7% and 9%, respectively.

Top congressional Republican Kevin McCarthy on Tuesday urged members of his party to support the deal even as he faced a direct challenge from some, which weighed on oil prices during the previous session. Still, a key party hardliner said he would likely support the measure in a critical procedural vote, which would allow it to clear a pivotal House of Representatives Rules Committee with a Republican majority. The committee was due to vote later on whether to advance the 99-page bill.

The debt deadline nearly coincides with the June 4 meeting of OPEC+ - the Organization of the Petroleum Exporting Countries and allies including Russia. Traders were uncertain about whether the group will increase output cuts as a slump in prices weighs on the market.

Saudi Arabian Energy Minister Abdulaziz bin Salman last week warned short-sellers betting oil prices would fall to "watch out" in a possible signal that OPEC+ may cut output. However, comments from Russian oil officials and sources, including Deputy Prime Minister Alexander Novak, indicate the world's third-largest oil producer is leaning toward leaving output unchanged.

In April, Saudi Arabia and other members of OPEC+ announced further oil output cuts of around 1.2 million barrels per day (bpd), bringing the total volume of cuts by OPEC+ to 3.66 million bpd, according to Reuters calculations.

Market participants also awaited industry data on U.S. crude stockpiles due later on Wednesday. The data was delayed by a day because of a U.S. holiday earlier this week. Seven analysts polled by Reuters estimated on average that crude inventories fell by about 1.2 million barrels in the week to May 26.

We remind, Russia is leaning towards leaving oil production volumes unchanged ahead of an OPEC+ policy meeting on June 4 because Moscow is content with current prices and output. OPEC+, which groups the Organization of the Petroleum Exporting Countries with Russia and other allies, surprised the market on April 2 with further output cuts that pushed up the price of oil.

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Nexam Chemicals has achieved a new milestone in its efforts to increase the recycled polyethylene terephthalate (rPET) content in its products, said Packaging-gateway.

The company specialises in developing solutions that improve the properties and performance of plastics. It invents, develops, manufactures and sells additives to various plastics companies across the globe.

Under the new milestone, Nexam has succeeded in using their additive technology to increase the overall amount of rPET in its offerings. The solution is now fully developed and approved for technical use.

Furthermore, the company has secured its first production order for thermoformed food packaging. The order has an estimated value of approximately Skr0.5m. Nexam CEO Ronnie Tornqvist said: “We see an increasing interest in our products in this type of application and we have several ongoing projects in Europe.

“This type of food packaging, together with our additives in recycled PET for fibre, are two areas with great potential.” Since 2022, the company has been working on a project in collaboration with an Israel-based food packaging manufacturer to boost the amount of rPET in its products.

The company said that the additives help in restoring and improving some of the base properties of the plastics, which are often lost during the recycling process. In order to avoid this, the company uses its reactive recycling method to upcycle rPET content, instead of using traditional methods.

Tornqvist added: “Our additives open the door for the majority of actors to use recycled plastic at a low cost in the manufacture of products that are aimed at areas with higher demands on both quality and durability.

We remind, Nasdaq First North-listed Nexam Chemical – which invents, develops, produces and sells additives to the plastics industry worldwide – has continued success with additives for PET recycling in South Korea. The order has a value of approximately SEK 2 million and will be delivered during February, March and April 2023. This builds further confidence in the Reactive Recycling product portfolio.

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Chemical maker Lyondell Basell Industries said on Wednesday that it plans to delay its refining business exit from year-end 2023 to no later than the end of the first quarter 2025, said Reuters.

The company said in April it would close its Houston refinery by the end of 2023 after two failed attempts to sell the plant, and the closing of Lyondell's five U.S. refineries in the past two years.

"Favorable inspections and consistent performance have given the company confidence to continue safe and reliable operations at the Houston site," Lyondell said on Wednesday.

The company said it will continue to look at future options for the Houston site once Lyondell exits oil refining, including low carbon initiatives such as producing blue and green hydrogen.

We remind, LyondellBasell (LYB) said it is moving ahead with engineering for a commercial scale advanced plastics waste recycling plant it intends to build at its Wesseling, Germany, production site together with Germany’s 23 Oaks Investments. The companies agreed to form a joint venture, called One Source Resources, that would operate the facility with capacity to convert the plastics waste generated by an estimated 1.3 million people into feedstock to make 50,000 t/y of new plastic materials.

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