Pemex to Boost Base Oil Output

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After years of reduced production, Mexico’s government wants state-owned Petroleos Mexicanos to raise its output of base oil, part of a strategy to lower dependence on imports of fuel and lubricants.

Mexico’s secretary of energy, Norma Rocio Nahle Garcia said that base oils are part of the strategy during a recent interview with Milenio, a transcript of which was published Jan. 13 on the news organization’s website. Any increase in base oil production would presumably take place at Pemex’s refinery in Salamanca, Mexico, which includes the nation’s only base oil plant.

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President Andres Manuel Lopez Obrador’s administration wants to halt Mexican exports of crude oil in 2023 and instead have that crude oil processed by Pemex, the country’s only oil refiner. Pemex’s refining capacity is set for a large increase. This month it expects to close a buyout of Shell’s stake in a Deer Park, Texas, refinery that has been a 50-50 joint venture.

Later this year Pemex plans to complete construction of its seventh and largest refinery, a facility at the port of Dos Bocos, in Tabasco state, with crude throughput capacity of 340,000 barrels per day. Pemex is also rehabilitating its existing refineries.

As a result, officials in Lopez Obrador’s administration have said for months that crude exports, not including those sent to Deer Park, will decrease from approximately 1 million b/d to 435,000 b/d in 2022 and to nil in 2023.

Revenue from those exports accounts for a large chunk of the federal budget, but Nahle Garcia told Milenio that the decrease will be more than offset by savings in money currently spent to import fuel and other petroleum products and by revenue from increased Pemex sales of fuels and base oils.

“We are allocating a lot of resources to buy gasoline,” she said. “We sell the oil through one door, and the money we receive [goes out] through the other door. The resource that we are going to stop receiving will be compensated with the sale of gasoline and lubricants [base oils] that Pemex is generating.”

Nahle Garcia did not say how much base oil out will increase, and Pemex officials could not be reached for comment. The Salamanca base oil plant has capacity to make 6,000 b/d of API Group I base oil, according to Lubes’n’Greases’ Base Stock Plant Data, but it has been operating significantly below that rate for years.

Observers say the plant has suffered from insufficient upkeep. Pemex has discussed initiatives to upgrade the plant a few times over the past two decades, but those plans have fallen by the wayside.

Mexico imports large volumes of base oil from the United States.