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Mexican Pemex seeks to increase crude oil processing levels in April

Mexico's Pemex will increase its crude processing levels in April as it restarts operations at three refineries with a total combined capacity of 790,000 b/d, the company told S&P Global Platts late Tuesday.

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The state-owned company is currently restarting its 275,000 b/d Minatitlan and 190,000 b/d Madero refineries after the company completed major maintenance works at both facilities that began in second-half 2017.

Pemex is also restarting a catalytic unit at its 315,000 b/d Tula refinery, where it had carried out maintenance works since December 2017, the company said.

According to Pemex's latest operational data, Tula's production fell to 135,000 b/d in January, 26,250 b/d less than December, and one-third less compared with a year ago.

Pemex had changed its operational strategy from processing crude at any price to become a profitable refiner, the company told Platts.

This led the company to stop unprofitable operations such as Madero and Minatitlan, which is unprecedented in its history.

From January-November 2017, Tula processed 219,830 b/d of crude, which Pemex described as its optimal operational level from a profit perspective.

Once the catalytic unit is restarted, Tula is expected to reach similar crude processing levels, the company said.

In January, Pemex processed a total of 594,200 b/d of crude oil, 25,270 b/d higher than in December, but down 35% year on year.

The state-owned company expects to increase processing levels to as much as 1 million b/d in H2 2018 as long as it is profitable.

Tula is not configured to process heavy crude oil, which has a high yield of fuel oil, a product with diminishing value in Mexico as the country's power industry is switching to natural gas.

"The more crude oil we process the more money we lose as we produce more fuel oil, which is worth less than crude oil," Pemex said. "All our focus lays in having profitable operations," it added.

For the first time in many decades, Pemex made a profit on its refining operations in 2017 although it had a combined utilization rate of 47.5% across its six refineries, processing a total of 768,000 b/d, the company said.

Its crude processing levels last year were significantly affected by the maintenance works at Madero and Minatitlan, as well as its 330,000 b/d Salina Cruz refinery which was shutdown for most of H2 2017 due to damage from natural disasters.


As Pemex's crude production became heavier in recent decades, the company was forced to feed heavier crudes to its refineries.

The company has sought to reconfigure all of its refineries but this has been a major challenge due to the high cost.

As a result of Mexico's energy reform, Pemex is looking for partners to participate in the reconfiguration of its Tula, Salina Cruz, and 220,000 b/d Salamanca refineries.

Previously, Pemex told Platts it was assessing the possibility of importing light crude oil to increase the efficiency of its refineries.

However, issues with regards to compatibility have made this effort difficult.

Both Minatitlan and Madero refineries have processing plants configured to re fine heavy crudes. However, the lack of investment as a result of Pemex's austerity budget in response to the 2014 oil price crash affected the plant's operations.

According to the Mexican government, Madero and Minatitlan had a fuel oil yield of 44% and 34%, respectively, in 2017, compared with a rate of as low as 5% in previous years.

Madero was previously operating at a loss but it is now expected to make a profit of $8-10/b, Pemex previously said.

The state-owned company is currently installing a coker at Tula. Construction of the coker is scheduled to be completed in 2020, two years later than originally planned.

The coker will expand Tula's production yield of gasoline and diesel to 85%, from 65%, increasing the production of motor fuels to 220,000 b/d, from 154,000 b/d currently.

In a second reconfiguration and modernization phase expected to end in 2022, Pemex will increase Tula's crude processing capacity to 340,000 b/d, allowing it to produce 310,000 b/d of motor fuels.

Pemex has said it is in the process of reaching an agreement with a group led by Japan's Mitsui to build and operate the second phase of its reconfiguration of its Tula refinery.

--Daniel Rodriguez,
--Edited by Norazlina Juma'at,