March 18, 2019 / 2:21 PM / 4 months ago

Mexico invites three U.S. companies, foreign firms to bid on new refinery

MEXICO CITY (Reuters) - Mexico invited a host of international firms, including three U.S. companies, to bid on the construction of an $8 billion oil refinery, officials said on Monday, as President Andres Manuel Lopez Obrador seeks to fast-track one of his signature projects.

FILE PHOTO: A view of the headquarters of state owned oil company Pemex in Mexico City, Mexico March 5, 2019. REUTERS/Daniel Becerril

The facility would be owned by Mexico’s national oil company, Pemex, becoming its seventh domestic refinery, and built near the Dos Bocas port on Mexico’s southern Gulf coast. It is intended to help wean the country off growing fuel imports, a major campaign promise of Lopez Obrador, who took office in December.

Energy Minister Rocio Nahle said at an event commemorating the 1938 nationalization of Mexico’s oil industry that those invited to submit bids will include two consortia with American companies: U.S.-based Bechtel with Italy’s Techint, and Australia’s WorleyParsons with U.S.-based Jacobs Engineering Group.

Two sole bidders were also invited: U.S.-based KBR and France’s Technip.

“The companies we are calling upon for the Dos Bocas refinery are the best in the world,” Lopez Obrador said earlier on Monday prior to unveiling the names of the firms.

“We will be efficient and at the same time avoid corruption,” said the veteran leftist, who won a landslide election last year pledging to root out graft.

Despite tensions with U.S. President Donald Trump over trade and immigration, three of the four potential bidders selected by Lopez Obrador’s government include American companies.

Officials said they expect the facility to be constructed in three years, the first new oil refinery to be built in Mexico in around four decades.

To be located in the Gulf Coast state of Tabasco, Nahle said the refinery has already been granted all required government permits, including for construction. Mexico’s oil safety regulator ASEA, however, fined a contractor in January for clearing protected mangrove from the site without the correct permits.

Nahle said the facility will include 17 processing plants and 93 storage tanks, as well as access to highways, a rail line and docking for ships.

The March 18 anniversary of President Lazaro Cardenas’ expropriation of U.S. and British oil companies, a national holiday in Mexico, is typically a day when a wide range of political, industry and labor officials heap praise on Pemex.

But a notable absence from the ceremony in the central city of Tula, home to a Pemex refinery, was the leader of Mexico’s powerful oil workers union, ex-Senator Carlos Romero Deschamps, who has regularly attended the event for years. Presidential spokesman Jesus Ramirez told a local radio program on Monday that Romero Deschamps had not been invited to speak at the event, adding that it was limited to government officials.

The labor leader has been accused of corruption in the past, charges that he has denied.

Lopez Obrador, who cites the socialist-leaning Cardenas as a hero and who himself favors a more state-centric energy model, has been a sharp critic of the previous government’s constitutional reform that ended Pemex’s decades-long monopoly.

The reform also opened the door to private fuel importers, as well as allowing new foreign and private gasoline and diesel brands to enter the retail market.

The 2019 budget for Petroleos Mexicanos, as Pemex is formally known, calls for spending almost $2.5 billion on Dos Bocas, which aims to be able to process 340,000 barrels per day of heavy crude. That processing capacity would make the new refinery Pemex’s biggest.

Government officials have repeatedly estimated the total cost of the refinery at some $8 billion, but recently have said it could cost as little as $6 billion.

Pablo Medina, a Houston-based oil analyst with Welligence Energy Analytics, cast doubt on the aggressive time frame set out by Lopez Obrador for construction.

“To think that a project of this nature could be designed and built in three years would probably set a world record,” he said. Similar size refineries typically take between five and 10 years to complete, he added.

Reporting by Ana Isabel Martinez and David Alire Garcia; additional reporting by Noe Torres and Daina Beth Solomon; editing by Frank Jack Daniel, Diane Craft and Leslie Adler

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