Page 4 - LatAmOil Week 24

LatAmOil COMMENTARY LatAmOil

Mexico’s refining strategy

leads to HSFO oversupply

The government is pushing Pemex to produce more gasoline

and is finding itself with too much fuel oil as a result

GLOBAL fuel and energy demand has dropped Demand down, production up
precipitously since the advent of the corona- Mexico’s government introduced lockdown
WHAT: virus (COVID-19) pandemic, and it remains measures on March 23, in a move that led
Mexico’s refinery relatively low even as governments begin to lift to reduced activity at Pemex’s oilfields and
utilisation rates have some of the public health restrictions they intro- refineries.
risen, despite the duced earlier in the year. The slowdown did not last for long, though.
coronavirus-related drop Mexico is certainly no exception to this Recently published government data show that
in demand. trend, which has affected the entire planet. Like refinery utilisation rates climbed from an aver-
so many other countries, it has seen crude oil, age of 38% in April to around 44% in the week
WHY: natural gas and petroleum product consump- ending on May 1. Likewise, Pemex went from
Pemex is now producing tion decline within the last few months. producing around 190,000 barrels per day of
more HSFO than it can Nevertheless, the country’s oil-refining gasoline as of mid-March to turning out 248,000
sell. industry is actually working to ramp up pro- bpd in the week ending on May 1.
duction, in line with President Andres Manuel These data show that refinery utilisation rates
WHAT NEXT: Lopez Obrador’s plans for turning Pemex, the and gasoline yields were already on the way up
Mexico City hopes the national oil company (NOC), into an engine of by mid-May, when Mexican authorities began
national power provider economic growth. Its efforts to do so appear to reversing the shutdown. And while the govern-
can absorb the excess, be succeeding, but higher output levels are not ment has not yet published official data covering
but demand will not rise likely to yield the economic growth the presi- the entire month of May or the first half of June,
immediately. dent has predicted. Instead, they may create a there is no reason to believe that conditions have
new set of problems. changed within the last few weeks.

P4 www. NEWSBASE .com Week 24 18•June•2020