July 3, 2017 / 4:24 PM / 21 days ago

Exclusive: Mexico's Pemex sees October selection of refinery coking plant partner - sources

3 Min Read

FILE PHOTO: A general view of the Mexico's state-owned company Pemex refinery in Tula, Hidalgo, Mexico April 18, 2017.Carlos Jasso/File Photo

MEXICO CITY (Reuters) - Mexican state oil company Pemex plans to choose a partner at the end of October to finish the development and operate a $2 billion coking plant at its Tula refinery, government and Pemex sources told Reuters.

Pemex is looking for partners to improve the performance of its state-owned refineries, which currently process about 915,000 bpd of crude, well below their combined capacity of 1.6 million bpd.

Pemex had previously planned to select a partner before June but the process has fallen behind schedule "because of the complexity and the investment needed," said a separate industry source with direct knowledge of the project.

Since May, Pemex has invited 56 companies to bid but will not launch a tender as planned, a Pemex source said, calling the process "open, competitive and transparent."

Two years of sagging oil prices and mounting debt have forced the Mexican oil firm to seek equity partners to help fund key projects.

Asked about the partnership plan, a Pemex spokesman said the details provided by sources were correct.

Japan's Mitsui & Co., Korea's SK Group, Italy's Eni, China's PetroChina and Sinopec, British-Dutch Royal Dutch Shell Plc and U.S. oil major Chevron are among the companies interested in the project, sources told Reuters in April.

Pemex has hired Bank of America Merrill Lynch to help in the search for a partner, the Pemex source said.

Tula, like two other Pemex refineries, lacks coking capacity, which boosts production of higher-value fuels like gasoline from Mexico's increasingly heavy crude production.

Interested companies are being asked to present their proposals by the third week of August and Pemex will draw up a shortlist by September, two Pemex sources said.

The final selection "will take place in the last week of October," the first Pemex source said.

Tula is Pemex's second largest refinery, with a capacity to process 315,000 barrels per day (bpd) but in May processed 228,126 bpd, company data showed.

The new plant will be located adjacent to Pemex's existing Tula refinery, in the central state of Hidalgo.

In 2015, Pemex said it signed a contract with ICA Fluor for engineering, procurement and construction for an initial phase of projects to boost gasoline and diesel output and reduce fuel oil output by building a coking plant. Reuters was not able to confirm the status of the project with ICA Fluor, a joint venture between construction firm ICA and Fluor Corp.

In 2016, the state-owned oil company presented a business plan that included the "Tolling coker Tula Alliance" project, as well as partnerships to improve operations and/or reconfigure the Tula, Salamanca and Salina Cruz refineries.

Reporting by Ana Isabel Martinez; Editing by David Gregorio

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