Mexico’s Petróleos Mexicanos, or Pemex, plans to invest $23 billion in coming years to upgrade its refinery system, the state-run oil company confirmed on Wednesday.
With the investment, Pemex aims to increase its production of clean fuels and expand its crude processing capacity, according to government officials.
The projects, some of which are already underway, come at a time when Pemex is struggling with budget cuts as a result of the slump in global oil prices and facing competition in upstream exploration and production for the first time, owing to new energy laws in Mexico encouraging foreign investment.
President Enrique Peña Nieto announced the planned investments at the Tula refinery in central Mexico, where Pemex is carrying out a $5 -billion upgrade that will make it the company’s largest with processing capacity of 340,000 bpd.
Pemex said it also plans to upgrade refineries at Salamanca and Salina Cruz for an estimated $8 billion.
Other investments under the plan include $3.1 billion at all of Pemex’s refineries to more than double output of ultra-low-sulfur gasoline to 212,000 bpd, and $3.9 billion to raise output of ultra-low-sulfur diesel, thereby reducing imports of the fuel.
An additional $3 billion will be invested in a series of cogeneration projects, which Pemex expects to generate over 2,300 megawatts of electricity.
The timing of the projects, which will include partnerships with private companies, comes almost a year after Pemex had said it would delay some refinery upgrades and clean fuels projects as a result of budget cuts in 2015 due to low oil prices.
Crude prices have continued falling this year, and on Monday fell below $30 for Mexico’s export crude.
Pemex CEO Emilio Lozoya said at the event that his company had managed to lower administrative and operating costs this year by several billion dollars, and that the company appears to have stabilized its oil production in the second half of the year at 2.27 million bpd.
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