February 18, 2010 / 7:05 PM / in 8 years

Mexico oil port plan may help Maya quality, output

* Pemex eyes $377 million crude treatment plant

* Traders say Maya crude quality has become less reliable

* Expanded treatment capacity could help slow oil decline

By Robert Campbell

MEXICO CITY, Feb 18 (Reuters) - Mexico’s state oil company Pemex is mulling a $377 million upgrade of crude oil treatment facilities to fix quality problems in its main export blend, people familiar with the plan said on Thursday.

The project, which has not yet been released for tender, envisions the construction of new equipment at the Dos Bocas oil terminal that would cut the water and salt content in Maya crude oil, said one of the people who had seen a Pemex [PEMX.UL] presentation on the project.

Crude oil traders say fluctuations in the quality of Maya crude oil have become more common with cargoes coming in heavier than expected or with high water content, making it harder to refine.

“It is something that has come up from time to time that we think is linked to natural field decline,” said a Maya buyer.

Pemex did not immediately return a request for comment.

No cargoes of Mexican crude oil have been rejected by buyers due to quality problems, traders say, but refiners are anxious to see the issue resolved.

CANTARELL HELP

Improving crude treatment facilities could also assist Pemex in stemming the slide in oil production that has slashed its output by nearly a quarter since 2004 to less than 2.6 million barrels per day, threatening the country’s status as a major oil exporter.

    The culprit behind the dropping output is the giant Cantarell oil field. Cantarell, which produced more than 2 million bpd in 2004, pumped only 599,000 bpd in December, as its oil layer shrank, allowing water and natural gas to seep into Pemex’s wells.

    As the amount of water produced at Cantarell exceeds Pemex’s processing capacity, wells must be shut down, speeding up the decline of the field.

    Adding crude oil dehydration capacity could allow Pemex to leave some wells open for longer, which could help to slow the rate of decline at Cantarell and help prop up Mexican oil exports, which pay for more than a third of the federal government’s budget.

    Pemex would like to have the project completed by the end of 2011, which means it will have to tender the project this year, sources said.

    “It’s a bigger version of the crude dehydration project that was constructed at Dos Bocas last year,” said the person who declined to be named as his company is seeking business with Pemex.

    A joint venture of Fluor Corp (FLR.N) and Mexican engineering group ICA (ICA.MX) was awarded a $45 million contract in 2008 to construct a crude oil dehydration system at Dos Bocas.

    The new facility being considered would probably have considerably more capacity, possibly as much as 100,000 bpd of produced water, said the person whose company is seeking business with Pemex. (Reporting by Robert Campbell; Editing by Marguerita Choy)

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