The Pemex logo is seen at its headquarters in Mexico City, Mexico. File photo/Reuters
Mexican President Andres Manuel Lopez Obrador has officially launched the $8 billion construction of a controversial oil refinery that experts say is likely to blowout in cost.
The huge project, inaugurated on Sunday, aims to boost Mexico’s struggling state oil company Pemex and provide economic stimulus to the country’s impoverished south.
“We will build it in three years at a cost of 150 billion pesos ($8 billion). No doubt about it!” the leftwing president said.
Experts however say the project will nearly double in cost and take some eight years to complete.
A group of foreign firms selected by the government were first granted the tender to build the Dos Bocas oil refinery in southeastern Tabasco state — where Lopez Obrador was born.
The tender was cancelled when the firms put forward completion dates and budget estimates greater than those demanded by the president.
The government then gave the project to the deeply indebted oil company Pemex.
Once completed, it would allow Pemex to process some 340,000 barrels of crude per day and deliver 170,000 barrels of petrol as well as 120,000 barrels of diesel.
Experts however doubt Pemex has the necessary experience to see the project through.
They also say it is a mistake to funnel resources into the new refinery instead of pushing the company to boost its dwindling production of gasoline, which has fallen 50 per cent from its peak of 3.4 million barrels per day 15 years ago.
Pemex is more than $100 billion in debt and is losing some $1.9 billion each quarter. It is being targeted by credit agencies that have urged the company to invest more in exploration and production to avoid financial disaster.
Lopez Obrador says the refinery was needed to break Mexico’s dependence on foreign gasoline imports — some 70 per cent of what it uses — and would be a boost for growth for the south, which is the country’s poorest region.
“It is time for the southeast to work for the benefit of all — that’s where the natural resources are and where the petrol is,” he said, adding the construction is an “act of justice” towards that part of the country.
It is thought the project will create some 100,000 jobs.
Pemex currently has six refineries which — because of a lack of investment — operate at less than one-third capacity.
Energy minister Rocio Nahle said refining oil was a “good business” and that if the refinery operated correctly, the investment could be made back in four to five years.
He added “all care has been taken” regarding the environment, following complaints no impact study had been carried out and mangroves would be destroyed in the construction area.
Emilio Lozoya, a former chief of Mexico’s state oil firm Pemex, was arrested on Tuesday in Palma de Mallorca after an arrest warrant was issued by Mexican authorities, a spokesman for the Spanish police said on Wednesday.
Goalkeeper Guillermo Ochoa saved a sudden death penalty as Mexico edged Costa Rica 5-4 on penalties to reach the CONCACAF Gold Cup semi-finals in Houston, Texas on Saturday.
The women of the indigenous community in the east of Mexico said how they felt cheated of their traditional motifs where "each element has a personal, family or community meaning."
The newly formed International Advisory Council recently held its first meeting at the Dubai Executive Council’s headquarters where member companies discussed efforts to boost economic competitiveness and stimulate business activity in Dubai.
The 12th Arab Strategy Forum kicked off in Dubai on Monday, under the patronage of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai.
As part of The Department of Finance - Abu Dhabi’s ongoing efforts for improving the quality and basis for financial statements preparation at the emirate level and adoption of the best international standards in this field,