Dos Bocas tender declared void, SENER and Pemex to build new refinery

Mexico’s Federal Government

has declared void an international tender to build the Dos Bocas oil refinery in Tabasco , a key infrastructural project of President Andrés Manuel López Obrador. Thus, the Ministry of Energy (SENER) and the state oil company Pemex will undertake the construction of the mega project that is set to be completed in May 2022.

President López Obrador

informed in a morning press conference that foreign companies had exceeded the cost of the project, which the government had estimated at USD$8.33 billion . Furthermore, the companies did not cover the execution period of the work.

Therefore, Energy Minister Rocío Nahle will be in charge of the project and the construction of the Dos Bocas refinery will start on June 2 , with an estimated cost of MXN$160 billion (USD$8.33 billion).

“We will finish the refinery on time and it will be a challenge to complete it in three years’ time with a lower cost than that estimated by private companies. This project will cost MXN$160 billion and will be complete in no more than three years’ time,” she stated.

It is worth noting that financial analysts from Mexico’s Institute of Competitiveness (IMCO) have estimated that the investment has a 2% chance of success and has strongly suggested that the project be canceled.

The institution conducted a simulation to evaluate the financial feasibility of the investment. It consisted of studying 30,000 scenarios while modifying financial variables for each scenario under standards set by Mexico’s Ministry of Finance.

Furthermore, the study conducted by IMCO did not take into account additional construction and infrastructure costs such as the installation of new pipelines and storage facilities nor the refurbishing of the Dos Bocas port to receive deep draught ships.

In spite of this, Mexico’s new administration is confident that the project will succeed. “In order to finish the refinery on time and with this budget, we will have to make it ourselves with Mexican workers and technicians,” stated President Obrador, who called for specialists in the field to demonstrate the feasibility of building a new refinery in three years’ time.

“Mexico’s oil industry was rescued in 1938, and I have no doubt that we will succeed,” he concluded.

The firms bidding to build Mexico's new oil refinery have a dark past

dm