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| Fig. 1: A view of the Deer Park Refinery from the Houston Ship Channel. (Source: Wikimedia Commons) |
Mexico has expressed its desire to stop all oil exports by 2023 in an effort to pursue its own energy security. [1] Exports were supposed to be reduced to 435,000 barrels per day (bpd) in 2022, but that may not have been fully realized due to increased oil prices resulting from the Russian invasion of Ukraine. [1,2] However, these plans were made against the backdrop of Petroleos Mexicanos (Pemex) purported lack of processing capacity, and also a poor operating and safety record. Therefore, it is reasonable to questiopn how feasible is Mexico's plan to stop exporting oil.
In 2021, Mexico produced 1,756 thousand bpd of crude oil and condensates. [3] This number excludes any natural gas liquids. In a future in which Mexican crude exports have ceased, all of this production would need to be refined in Pemex refineries. Mexico's refining capacity for 2021 was 1,558 thousand bpd. [3] However, the refinery throughput was only 712 thousand bpd, meaning that Mexico only utilized 46% of its refining capacity last year. [4] The refining throughput in 2021 increased by 121 thousand bpd compared to 2020's refining throughput. [3] This number was not influenced by the pandemic. 2019's throughput was 592 thousand bpd, and both numbers represent sharp declines from the 2013 peak of 1,223 thousand bpd. [3]
Comparing Mexico's crude oil production and refining capacity, there is a deficit of 198 thousand bpd. Looking at production and refining throughput, there is a much larger deficit of 1,044 thousand bpd. On July 1st, 2022, Pemex inaugurated its largest oil refinery, the Olmeca Refinery, which has a refining capacity of 340 thousand bpd. [4] Additionally, at the beginning of 2022, Pemex took control of the Deer Park refinery in Houston, Texas (see Fig. 1). This also has a refining capacity of 340 thousand bpd. [5] This would increase Mexico's total refining capacity to 2,238 thousand bpd.
Currently, Mexico's refining capacity is not sufficient to process all of the oil it produces, especially given that less than half of its refining capacity is being used. Pemex's acquisition and construction of the Deer Park and Olmeca refineries respectively increase Mexico's refining capacity beyond its current oil production. This makes Mexico's plan to stop exporting crude oil feasible so long as it can match refining throughput to its oil production by resolving operational issues at its refineries. Including the two new facilities, putting 1,756 thousand bpd of crude oil production through 2,238 thousand bpd of refining capacity would require a utilization increase to 78%, compared to the current 46%.
© Christopher Perez. The author warrants that the work is the author's own and that Stanford University provided no input other than typesetting and referencing guidelines. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.
[1] A. Stillman, "Mexico Shuns International Oil Markets to Produce More Gasoline at Home," Bloomberg, 28 Dec 21.
[2] A. Stillman and N. Cattan, "Mexico Looks to Suspend Crude Export Cuts as Prices Rally," Bloomberg, 18 Mar 22.
[3] "BP Statistical Review of World Energy 2022," British Petroleum, June 2022.
[5] A. Barrera, "Mexico's Largest Oil Refinery Opens to Fanfare, Not Yet Operational," Reuters, 1 Jul 22.
[5] A. Martinez, "Shell to Hand Over Deer Park Refinery to Pemex Next Week - Sources," Reuters, 13 Jan 22.
