The Olmec refinery, Dos Bocas, Mexico’s emblematic energy project and a refining complex in the southern region of the country that has faced billions of dollars in cost overruns, is generating concern among the members of the Board of Directors of Petróleos Mexicanos (Pemex).
In the past weekthe board of the state oil company approved a larger budget for the project, but the vote was far from unanimous, according to people with knowledge of the deliberations, who asked not to be identified because the information is not public. Three members voted for reject the new spending plan, they pointed out. And at least one member who approved it expressed concern about the lack of accountability in cost management. Along with increasing the budget, the board also eliminated the methodology used to monitor project costs, eliminating what some considered a fundamental means of oversight.
Spokespeople for Mexico’s energy ministry and Pemex did not respond to requests for comment.
The unusual clash within the Pemex Board of Directors highlights the pressure that the Dos Bocas project is exerting on the finances of the oil company and the deterioration that it is causing in the political capital of the Mexican president, Andrés Manuel López Obrador. AMLO has qualified the Dos Bocas refinery as key to its goal of ending Mexico’s dependence on the rest of the world for fuel, bringing the country one step closer to energy independence. Once completed, it will be the country’s seventh refinery, increasing its oil processing capacity by 20 percent.
But the Dos Bocas project has come at a high price: construction contracts through 2024 have risen to more than $14 billion and will likely add between 16 billion and 18 billion dollars by the time the complex is finished, more than double the original price. The total cost could go up even more amid the delays.
Pemex’s board is made up of five independent members and five senior government officials, including the country’s energy and finance secretaries. The three members who voted against the budget were all independentsaccording to people familiar with the situation.
the refinery was declared open on July 1 even though it was not yet ready to produce fuel. Actual operations are expected to start in the middle of next year. Cost overruns prompted the resignation of a top government auditor in December.