Mexico will give the flag this Friday to its first new refinery in more than four decades.
Dos Bocas, a complex of almost 600 hectares in an old mangrove swamp, is the government's trick to achieve "energy self-sufficiency" and stop importing gasoline.
The inauguration of this flagship project of President Andrés Manuel López Obrador will serve to show muscle.
However, the refinery to which the ribbon will be cut is not yet under construction and its cost continues to rise.
The announced rebirth of Pemex starts halfway.
The municipality of Paraíso is experiencing a flurry of activity.
At the Antares Hotel, a couple of kilometers from the main entrance to Dos Bocas, refinery and Pemex workers come and go with hard hats and large bags of clothing.
"We are at 100% occupancy," warns Yadira Palma, the manager, whom she approaches to ask.
Since the works began, this is normal.
There are days when they are "150% full" and sublet other homes.
They have put
smart TVs
in the rooms, changed the air conditioners and are building an extension with more rooms.
“You could say that Paraíso entered modernity three years ago,” says Palma.
The evolution of the construction process of the Olmeca refinery, in the port of Dos Bocas, Tabasco, between 2017 and 2022.
There was a moment, during Enrique Peña Nieto's six-year term, when the hotel was about to close.
The 2013 energy reform removed Pemex's monopoly on oil exploitation to open it up to private investment.
The Paraíso port terminal, which supplies Pemex maritime platforms, saw activity fall by half.
From housing 100 ships in stormy season, suddenly they were less than 50. On the Antares, occupancy fell to 15% and staffing was reduced to a minimum.
López Obrador's oil dream saved them.
Upon arriving in government, the president set out to "rescue" Pemex, the most indebted oil company in the world, from what he considered to be an attempt to privatize it or even make it disappear.
The construction of Dos Bocas sought to underpin that strategy.
In 2019, the government began to cut down the mangrove where the fifteen-year-olds of the town used to go to take photos.
"We realized that they wanted to do something when the anteaters left for the road...", says Palma, from the roof of the hotel.
“Before everything looked green and now it is a city.”
A city of cranes and towers to burn gas.
The plans for Dos Bocas have had to adapt to two of the president's ambitions: speed and low cost.
López Obrador wanted to have it built in three years and with a budget of about 8,000 million dollars.
They invited four companies specializing in refineries to a restricted tender.
In the end, the contest was declared void.
One of the companies withdrew from participating and the proposals of the other three did not meet the requirements.
“They were asking for a lot, they went overboard, and at the time of construction,” López Obrador said.
"We are not going to do any work that we are not going to finish in the six-year term."
Instead, he commissioned the work to the Secretary of Energy, headed by Rocío Nahle.
Three years after the start, the construction is not yet finished.
In other words, a refinery will be inaugurated that has not yet started gasoline production.
The president has assured that it will be up and running by the end of 2022, but specialists estimate that this will not happen until the end of 2023 or the beginning of 2024. Reaching its maximum processing capacity -340,000 barrels of crude oil per day- may take even longer.
At the end of the construction, you must start a testing period that lasts between six and nine months.
At lunchtime, Dona Moni's taco stand doesn't give the impression that the play is about to end.
In an hour and a half, the nine kilos of carnitas, chicken tinga and cochinita pibil that he brought have disappeared.
About thirty workers, employed by Pemex contractors, devour the last tacos sitting at two long tables.
It's sweltering hot, and they're wearing orange jumpsuits with the sleeves rolled up at the arms and open to the chest.
They joke about the imminent visit of the president: “We will have to put on the overalls on Sunday, eh?”.
Almost all the clients are “foreigners”, coming from other States of the country attracted by the best salaries.
Workers on top of a tank, during the construction of the refinery. MEXICO PRESIDENCY (Reuters)
“What do we put on it, Mr. Róber?” asks Mónica Becerril, who just a few months ago was a housewife.
"Give me three carnitas, please," answers Roberto Valdés.
Originally from Mexico City, this 35-year-old glazier arrived in Paraíso six months ago with six other friends.
He was told that the glass for the refinery's laboratories had to be finished in June, in time for the inauguration.
For the first four months, he worked 15 hours a day without a break.
Lately they have given him Sundays off.
Although only a few "details" are missing, he does not like the rush of the project.
"Rome wasn't built in a day," he reflects, as he finishes his third block.
Topographer Luis Guadarrama, a 46-year-old from Veracruz, was one of the last to arrive at the post.
He removes his white helmet, revealing a sweat-laden forehead.
He was working on the vent tower, the tallest building in the refinery at 182 meters.
The company has told him that they have him for at least another six months.
“Ugh.
There is still metallic work, instrumentation, tests must be done… I think there will be more”, he says.
“This is not like handing over a swimming pool.
It must be verified that it works well.
Just as uncertain as the actual completion date of the works is their final cost.
The original $8 billion is out.
The president acknowledged last week that he could reach up to 12,000, 50% more.
Sources familiar with the work, cited by Bloomberg, raise it to 18,000 million, more than double.
If confirmed, Dos Bocas will be, by far, the most expensive work of the six-year term, above the Mayan Train or the Felipe Ángeles International Airport.
The calculations have ended up giving the reason to the companies that López Obrador accused of "exceeding" their budget.
Self-sufficiency in gasoline: an objective to be seen
Once completed, Dos Bocas will have the capacity to refine 340,000 barrels of oil per day, about a fifth of what Pemex extracts.
The Government has stated that the volume of refining would be sufficient to achieve energy self-sufficiency.
Currently, Mexico imports most of the gasoline used by the transportation sector - around 70% of the 715,000 barrels a day consumed on average in the first six months of last year, according to data from the energy ministry.
Since his arrival in government, López Obrador has tried to reduce that dependency as part of a nationalist agenda that advocates energy "sovereignty" and the "rescue" of Pemex.
“When we arrived, they were already selling the plants.
As they did with petrochemicals, they turned it into scrap.
They wanted the same for refining,” he declared two weeks ago.
“There is a shift, we are not going to continue with the same neoliberal policy in the energy sector”
The "turnaround" includes a rehabilitation program for the six existing refineries that were processing a volume of barrels well below their capacity due to lack of investment.
Now they produce, according to the Executive, at an average of 60% and they want to reach 80%.
From producing 198,000 barrels of gasoline per day for vehicles in 2018, Pemex produced 225,000 in 2021. In addition, the Government bought the participation that the multinational Shell had in the Deer Park facilities in Texas.
In line with this increased production and despite environmental commitments, Pemex's polluting emissions have doubled in three years.
If it operates at full capacity, an unrealistic scenario, Dos Bocas could inject around 170,000 barrels of gasoline, the experts consulted estimate.
If it is added to what has already been produced by the other six refineries and the around 110,000 barrels of Deer Park, it is still not enough to cover the demand.
However, former Pemex director Fluvio Ruiz believes that it is possible in the medium term: "When the six refineries are rehabilitated and the two coking plants are completed, Pemex's production, considering Deer Park, will practically cover the total of national demand.
In a country with just 1,189 charging stations and where only 4% of vehicles sold in 2021 were electric or hybrid, a future without gasoline is not yet in sight.
However, the debate around Dos Bocas focuses on the convenience of importing gasoline or producing it in Mexico.
Advocates of self-sufficiency point to shielding the country from geopolitical tensions and maintain that refining is a fundamental part of the value chain.
“Saying that Pemex should only focus on extraction is like saying that meat is nutritious.
If you only eat meat, you are going to die,” says Fluvio Ruiz.
"You have to diversify."
On the other hand, detractors point out that this agenda does not make economic sense because it is cheaper to import from abroad than to produce it within, due to the heaviness of Mexican crude.
In fact, in 2014, former President Enrique Peña Nieto canceled a project to build another refinery in Tula, considering that it was not profitable.
Although the profit margin has improved in 2022, the subsidiary in charge of refining has reported an average of 116,000 million pesos in annual losses in the last decade, according to an analysis by the Mexican Institute for Competitiveness (IMCO).
The oil company earns more from its crude extraction activities than from refining.
“Refining is a marginal activity where Pemex has lost many millions of pesos.
If you see it coldly, what would be best would be to focus on extraction to finance the future energy transition,” says Sergio Pimentel, former commissioner of the National Hydrocarbons Commission.
Cranes and workers work on the construction of the refinery, in October 2020. Presidency (Presidency)
Stopping exporting oil to refine it in the country implies an "opportunity cost," according to Óscar Ocampo, an IMCO researcher.
"You should place it where it is best paid and that is not necessarily selling it to Pemex itself," he says.
Regarding geopolitical concerns, the researcher points out that Mexico's great supplier of gasoline is the United States, a reliable partner to which it is linked by a free trade agreement.
“Depending on Russia is very different than depending on Texas.
Thinking that the US is going to cut off our supply from one day to the next is not something that seems possible, ”says the analyst.
In Paraíso, they hope that the refinery will leave, once completed, lower gasoline prices and some employment.
Vicente Jiménez, a 25-year-old industrial engineer, works in a store where the mannequins wear overalls instead of dresses.
Yellow vests are 10% off.
“When they finish, the foreigners are going to return and we are not going to sell the same thing,” he says.
He hopes to be placed in the refinery.
His father and his grandfather are Pemex workers and he would like to continue the tradition, although he sees it as complicated.
“Before, parents inherited the places to their children.
Not anymore,” he notes.
“If it is not possible, we will look for other horizons”.
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