Quake, Blackout, Breakdowns Cripple Mexico's Refinery Capacity

(Bloomberg) -- Mexico’s drivers may pay more for fuel after a power failure hit a second refinery the same week that the strongest earthquake in more than a century shut the nation’s biggest plant.

Cadereyta, in the northern state of Nuevo Leon, may not be fully operational until Friday following a blackout in northern Mexico on September 10, according to a person with direct knowledge of the situation.

Natural disasters and maintenance curbed output from three of state-owned oil company Petroleos Mexicanos’s six refineries, which account for 48 percent of capacity. That’s forced Pemex to boost fuel imports at a time when refineries in the U.S., Mexico’s biggest, nearest supplier, are making less fuel as they recover from Hurricane Harvey. Mexico processed processed the least amount of crude in July since December 1990.

Mexico was already “significantly shorter of gasoline” because of the outages at Salina Cruz and Madero, Facts Global Energy said in a research note. With shortages in the U.S. following Hurricane Harvey, Mexican demand “will increase the pressure on an already tight market.”

Running Low

The Salina Cruz refinery in Oaxaca, Mexico’s largest, which has been intermittently out of service since mid-June, was hit by last week’s deadly earthquake and could take two to three weeks to be brought back online. Pemex has also said its Madero refinery in the state of Tamaulipas is undergoing major maintenance work and will not return to normal operations until the end of December.

The 275,000 barrel-a-day Cadereyta refinery lost power for several hours on Sunday and some units were knocked offline. Many of the refinery’s units are still restarting, including a fluid catalytic cracking unit known as FCC-2 that is undergoing weeklong  maintenance, the person said late Wednesday.

Cadereyta continues to operate, according to a Pemex spokeswoman who asked not to be identified, citing company policy. She wouldn’t specify at what capacity. The fluid catalytic cracker at Mexico’s northernmost refinery was already undergoing maintenance before the blackout occurred, she said.

Hurricane Harvey shut more than 20 percent of U.S. refining capacity at one point, forcing Mexico to import fuel from Europe and Asia to make up the difference. At least 17 tankers have been chartered to load fuel through early October in countries outside the U.S. for delivery to Mexico, according to ship fixture date compiled by Bloomberg.

With assistance from Lucia Kassai. To contact the reporter on this story: Amy Stillman in Mexico City at astillman7@bloomberg.net. To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net Margot Habiby, Mike Jeffers.


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