Work is underway on what will be the largest oil refinery in Mexico – the Dos Bocas refinery.
In 2019, construction started on the site spanning 566 hectares in the southwest region of Tabasco. When complete, the will signal a turning point in Mexico’s long term energy independence. With 17 processing units, it will be capable of refining 340,000 barrels per day of crude oil, ensuring Mexico becomes self-sufficient in petroleum refining.
The project is being overseen by the Mexican state’s oil and gas company, Petroleos Mexicanos (PEMEX), and is an integral part of the country’s drive to end its status as a crude oil importer by 2023. Currently importing a significant amount of its fuel from the United States and Saudi Arabia, Dos Bocas will account for an increase in domestic crude consumption of up to a third of existing levels, making it a strategically vital source of petroleum refining.
Having initially been due for completion in 2022, the refinery has faced challenges that have spiralled costs and delayed completion until 2023. Within 18 months of the project starting, the Mexican peso depreciated in value, driving up many of the project’s costs. Now, with the costs of importing steel from abroad rising, domestic steel production companies are at a competitive advantage when it comes to winning contracts and supplying Dos Bocas with affordably sourced steel.
The changing financial outlook has pressured PEMEX to take steps to ensure that Dos Bocas can be completed on schedule. With the state-backed oil production firm already facing rising debts, the initially forecasted cost of Dos Bocas has risen from $8.9 billion to an estimated $12.4 billion, forcing PEMEX to look at alternative ways to complete the project. As part of the new approach, long-standing PEMEX contractor, ICA Fluor, has stepped in to oversee the remaining construction phases.
In addition to the financial pressures, the Bocas refinery has faced its own challenges during the construction process. While the rising construction costs have forced a change in approach when it comes to sourcing suppliers, the project has also been delayed several times due to production issues. Unseasonably heavy rains have caused the nearby water sources to rise, flooding the site, delaying work and causing damage on more than one occasion.
Finding the right technical expertise
The Dos Bocas refinery has faced challenges during construction, but with the project looking for new suppliers with the necessary technical experience, there are prospects for suppliers to participate in the initiative. To succeed, large energy projects require competent suppliers with the necessary skills and pre-qualified competence.