Enthusiasm for Mexican oil reforms fades as reality sets in

Mexico's oil refining industry ought to be on the verge of a bright new dawn after last month's shake-up which dismantled the state-run Pemex oil and gas monopoly, but Pemex's aging, ailing downstream sector - which suffered an estimated record $10B loss last year - remains far from salvation.

Reuters reports the wave of excitement that followed the opening of Mexico's vast oil fields to foreign investment has failed to translate into optimism for refineries such as the Miguel Hidalgo, where $1.23 is lost for every barrel of the ~292K bbl/day of crude it processes, and at most 60% of the crude processed is converted into higher value fuels - making it ~20% less productive than refineries along the U.S. Gulf Coast.

Foreign expertise could help bring efficiencies, but companies are wary: Top U.S. refinery Valero (VLO), for one, says it does not have any plans to invest in Mexico.


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