Mexico's state-owned Pemex will continue to direct funds to its six struggling refineries and work to build a new one, even as its refining margins fell to a negative $12.51/bl in the first quarter.
The company recently said that it would cut its capital spending by 10pc or Ps45mn ($1.66bn) in 2020 in response to the effects of the Covid-19 mitigation efforts and the global fall in crude prices. Most of that cut, or Ps40mn, will be in the company's generally more profitable exploration and production (E&P) segment, with the rest destined to other business lines, the company said today in its earnings call.
Credit ratings agencies have suggested that cutting spending in downstream would be a more efficient way to shore up Pemex finances, weighed by $105bn in debt. They have also urged the administration of President Andres Manuel Lopez Obrador to call off ambitious plans to build a new 340,000 b/d refinery in Dos Bocas, Tabasco.
Refining losses deepen
Pemex's losses on refining margins grew by almost five times from a negative margin of $2.64/bl in the last quarter of 2019. First quarter 2019 margins were $5.24/bl.
Refined products output declined in the first quarter, but at a shallower rate than the margin loss. Output of all refined products fell to 547,000 b/d the first quarter, down by 2.5pc from a year earlier and by 5.7pc from the previous quarter.
Pemex's output of higher-value gasoline and diesel decreased, which the company attributed to its ongoing maintenance program at its refineries with combined capacity of 1.6mn b/d.
But gasoline, diesel and jet fuel production at the 190,000 b/d Madero and the 220,000 b/d Salamanca refineries increased by 25,000 b/d and 10,000 b/d, respectively, during the quarter because of recently completed maintenance work. The next projects will focus on the 315,000 b/d Tula refinery and the 285,000 Minatitlan refineries.
"There will be a focus on the critical risks in the processing plants," in coming months, downstream director Reinaldo Wences said.
Pemex said initially that it planned to finish the bulk of its maintenance work by the end of February.
Diesel production fell to 103,000 b/d in the first quarter, down by 13pc from a year earlier and 12pc from the previous quarter. Gasoline output declined to 173,000 b/d, down by 10pc from both the year-earlier quarter and the previous one.
Pemex's output of other refined products such as coke increased by 30pc to 114,000 b/d from the same quarter of 2019 and grew by 3.6pc from a year earlier despite the decline in cleaner products.
Revenue from sales of all of its refined products — including dry gas, refined products and petrochemical products — decreased by 21pc to $6.7bn, along with a decline in international prices. Gasoline sales dropped by 16pc to $3.7bn in the first quarter of this year from the same period of 2019, while diesel sales fell by 26pc to $1.5bn. Jet fuel sales fell by 19pc to $472mn.
