Mexico launches new oil refinery, refuses solar permits

MEXICO CITY — Mexican President Andrés Manuel López Obrador’s office on Friday said the new Gulf Coast oil refinery he had built “is a dream come true.”

López Obrador “inaugurated” the partially completed Olmeca oil refinery in Dos Bocas, a town in his home state of Tabasco. He boasted that his government had decided to ignore “the siren calls … that the oil age was over”.

His government is so committed to oil — and so opposed to private renewable energy schemes — that it also turned down a request Friday from German automaker Audi to build a solar power facility at one of its factories.

When completed, the refinery project is expected to cost as much as $12 billion, well above original estimates of $9 billion.

In 2021, Mexico agreed to buy Shell’s 50% stake in the joint Deer Park refinery near Houston, Texas, for approximately $600 million. The two refineries are said to have similar capacities, leading to questions about the much larger investment in building a new refinery.

The new refinery is part of López Obrador’s start strategy to make Mexico self-sufficient in gasoline, which it has been importing for a long time. He noted that Mexico had not built a new refinery since the 1970s.

The eventual opening of the plant comes as many energy companies are trying to exit the refineries at a historically low margin as demand for renewable energy increases.

“We didn’t pay attention to the siren calls, the voices that predicted, perhaps in good faith, that the oil age was over and that electric cars and renewable energy were on the rise,” López Obrador said.

Later Friday, the environmental department announced that Audi Mexico’s request for permits to build a solar panel installation at its plant in the central state of Puebla had been rejected for technical reasons.

López Obrador has passed laws limiting the amount of electricity private gas and renewable energy facilities can sell, putting them last in line to purchase power, behind government-owned factories that often burn dirty fuel oil.

Leave a Comment