UPDATE 1-Pemex sees $3.5 bln Tula refinery expansion adding 40,000 bpd

Mon Sep 23, 2013 6:41pm EDT

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By David Alire Garcia

MEXICO CITY, Sept 23 (Reuters) - Mexico's state oil monopoly Pemex expects to add 40,000 barrels per day (bpd) of capacity by 2018 at its No.2 refinery, under a $3.5 billion expansion planned in tandem with construction firm ICA Fluor.

The first phase of the Tula refinery expansion project is now underway and includes basic engineering and other site preparations, a Pemex official told Reuters on Monday.

The expansion project awarded to ICA Fluor, a joint venture between Mexican construction company ICA and U.S. engineering firm Fluor Corp, will boost the refinery's distillates production by more than a quarter from current levels when completed, Pemex said in a statement on Sunday.

The project is separate from a new $10 billion refinery also planned for near the existing 325,000 bpd installation at Tula, which lies 51 miles (82 km) north of Mexico City.

"We're going to produce higher-value products (with the expansion project), including more gasoline, diesel and jet fuel," the Pemex official said, speaking on condition of anonymity in accordance with company policy.

The first phase of the expansion project is expected to wrap up in the second quarter of 2015, at which point construction will begin. The overall project is expected to be completed by the second quarter of 2018.

Last week, ICA Fluor won a contract valued at about $110 million to build a gas compression system at Mexico's Gulf coast port of Dos Bocas.

In July, ICA Chief Executive Alonso Quintana said the company will still take part in an expected windfall of up to $70 billion annually in new Mexican government infrastructure projects.

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