Mexico scraps refinery tender, Pemex to go it alone

The Mexican government has scrapped plans for outside firms to build the 340,000 b/d Dos Bocas refinery, charging the energy ministry and state-owned Pemex with building and managing the project.

The four companies bidding on the project "were asking a lot" and were over the $8bn budget and planned three-year construction period, President Andres Manuel Lopez Obrador said this morning in a press conference.

The companies — UK-based TechnipFMC, US-based KBR, a consortium of the US-based Bechtel and Italian-Argentinian Techint, and a consortium of Australia's WorleyParsons and US-based Jacobs Energy — were invited to participate in a restricted tender for project management. All but TechnipFMC submitted bids, energy secretary Rocio Nahle said this morning.

The tender result was due to be announced tomorrow but the bidders — hand picked in order to avoid corruption scandals such as that involving Brazil's Odebrecht — were advised late last night that the tender was declared void because they did not comply with the cost and schedule terms requested, Nahle said.

Mexico's energy minister will now be responsible for project management and construction, which will be carried out by Pemex. Nahle said project work will start on 2 June of this year and wrap by May 2021.

The new refinery was a campaign issue for Lopez Obrador, who wants to reduce Mexico's dependence on imported refined products, mostly from the US. Its existing six refineries are operating at below 40pc of their installed capacity.

But analysts have questioned the wisdom of the project from financial and technical perspectives, saying state-owned Pemex would be better off directing its limited budget to its more profitable exploration and production.

The government will invest Ps50bn ($2.5bn) in the refinery this year. The refinery will include 17 processing plants, auxiliary and generation plants, and connections to highways, railroad lines and the nearby Dos Bocas port.

"The strategy will maximize Mexican participation in the development of engineering, in the manufacture of equipment and in the use of specialized labor in order to guarantee higher national content," she said.

The original tender requirements included 50pc minimum national content.

The energy ministry has already assembled a team to develop the project, with personnel drawn from Pemex, the Mexican Petroleum Institute and the United Nations.