Pemex holds back barrels in bid to ramp up domestic fuelmaking

Mexico’s crude oil exports, which slumped to a 32-year low in January, are expected to pick up again this month after its state-owned refiner realized it can’t process nearly as much at home as it was targeting.

Daily oil exports plummeted 19% month on month to 849,000 barrels, the lowest in data going back to January 1990. The barrels kept in Mexico instead of going abroad were intended for processing at Petroleos Mexicanos’s domestic refineries, which have been trying to crank up fuelmaking at the expense of overseas sales. But Pemex didn’t refine nearly as much crude as expected in January, a person familiar said.

“I wouldn’t be surprised if volumes offered for export in February rebound,” said Karina Lopez Huitron, an analyst with Wood Mackenzie Ltd. “Despite all the maintenance that has been done, the refineries continue to face significant hurdles to increase runs in a significant way.” 

Wood Mackenzie’s Lopez estimates Mexican refineries will be able to process between 700,000 and 800,000 barrels a day this year, about matching the 2021 rate. That would be far less than Pemex’s pledge to double oil processing to 1.51 million barrels. Mexico has been seeking to boost its fuel production in a bid to self-sufficiency. Latin America’s second-largest economy currently imports about 70% of its gasoline needs, according to government data. 

Pemex didn’t return an email seeking comment. 

The drop in exports comes at a time when global supplies of crude oil are tight, as demand for oil recovers with economies reopening from the pandemic. OPEC+, which on Wednesday agreed to make a modest increase of another 400,000 barrels a day for March, has been struggling to revive halted supplies.