PEMEX struggles to maintain a leading position in refining
The Ing. Antonio Dovalí Jaime plant, located in the Salina Cruz port in Oaxaca, is PEMEX’s most important refinery, and just this morning (November 24, 2015), reports emerged of a fire at the site. The incident started in a storage plant shortly after 10am and quickly caused the dislodgement of over 2,000 workers. The NOC published a press release where it informed the public that the fire was under control and guaranteed that fuel supply would continue uninterrupted. Although there were no fatalities, PEMEX also reported that eight workers suffered superficial injuries. Photographs from the scene show a thick dark plume of smoke emanating from the blazing refinery.
As readers will know, this is not the first incident of this magnitude experienced by PEMEX this year. The most accident-prone areas used to be PEMEX Gas & Petroquímica and PEMEX Petroquímica Básica, which have now merged together as part of the NOC’s restructuring process to become PEMEX Transformación Industrial. This was the area in charge of operating the refinery. The string of incidents experienced by the parastatal over recent years may seem surprising given its claims that its Lost Time Injury Frequency (LTIF), the international indicator for measuring worker safety, decreased by 88% between 2013-2014. Be that as it may, according to Reuters, the rate only fell because PEMEX “reported an additional 330 million man hours worked in 2014 – an almost sevenfold increase from the previous year”. The reporting agency explains this was made possible by counting the hours worked by employees in areas not included in previous years.
The Salina Cruz incident could have caused a massive supply disruption, as it occurred in a vacuum tower capable of processing 330,000 b/d for the domestic market. This could potentially have given Mexico no choice but to send its oil to be processed in the US, adding insult to injury. Indeed, Reuters reported that PEMEX would refine the lowest level of crude oil in 2015 in at least a quarter of a century. The parastatal reassures the readers at the end of its press release by confirming that an adequate analysis will be carried out to isolate the root cause of this incident, but the NOC needs to step up its game if it wants to maintain its position among the world’s major refiners. In fact, if operations continue unchallenged, Reuters expects PEMEX to become “one of the world’s most inefficient refiners”.