Bid for energy independence
Mexico acquiring refinery in Texas nearly 200 years after rebels secured state’s freedom
DEER PARK, Texas — Two giant murals, on storage tanks at an oil refinery here, depict the rebels led by Sam Houston who secured Texas’ independence from Mexico in the 1830s. This week those murals will become the property of the Mexican national oil company, which is acquiring full control of the refinery.
The refinery purchase is part of President Andres Manuel López Obrador’s own bid for an independence of sorts. In an effort to achieve energy self-sufficiency, the president of Mexico is investing heavily in the state-owned oil company, placing a renewed emphasis on petroleum production and retreating from renewable energy even as some oil giants such as BP and Royal Dutch Shell are investing more in that sector.
López Obrador aims to eliminate most Mexican oil exports over the next two years so the country can process more of it domestically. He wants to replace the gasoline and diesel supplies the country currently buys from other refineries in the United States with fuel produced domestically or by the refinery in Deer Park, which would be made from crude oil it imports from Mexico.
The shift would be an ambitious leap for Petroleos Mexicanos, the company commonly known as Pemex. The company’s oil production has been falling for more than a decade, and it shoulders more than $100 billion in debt, the largest of any oil company in the world.
The decision to pay $596 million for a controlling interest in the Deer Park refinery, which sits on the Houston ship channel and would be the only major Pemex operation outside Mexico, is central to fulfilling López Obrador’s plans to rehabilitate the long-ailing oil sector and establishing eight productive refineries for Mexican use. Mexico also agreed to pay off $1.2 billion in debts that Pemex and Shell jointly owe as co-owners of the refinery, which is profitable.
“The most important thing is that in 2023 we will be self-sufficient in gasoline and diesel and there will be no increase in fuel prices,” López Obrador said in 2021.
López Obrador hails from the oilproducing state of Tabasco, and the powerful Pemex labor union is a crucial part of his political base. He ran on a platform of rebuilding the company, and he has raised its production budget, cut taxes it pays and reversed efforts by his predecessor to restructure its monopoly over oil production in the country.
When he took office in 2018, López Obrador began undoing changes made in 2013 to the country’s constitution intended to open the oil and gas industry to private and foreign investment. He is also pushing to reverse electricity reforms that his predecessor, Enrique Peña Nieto, put in place to increase the use of privately funded wind and solar farms and move away from staterun power plants fueled by oil and coal.
Energy experts say Mexico is backtracking on a commitment it made a decade ago under President Felipe Calderón, to generate more than one-third of its power from clean-energy sources by 2024. Mexico now produces just over 25% of its power from renewables.
“They are going to heavier fuels rather than to lighter fuels,” said David Goldwyn, a top U.S. State Department energy official in the Obama administration.
López Obrador’s government has said it will combat climate change by investing in hydroelectric power and reforestation.