translated from Spanish: Alert for the financial risks of the two-mouth refinery

The announcement by President Andrés Manuel López Obrador that Pemex and the secretariat of energy will be in charge of the Dos Bocas refinery project in Tabasco provoked negative reactions in the business and financial sector.
The rating agency Moody’s Investors Service considered that the president’s announcement is worrisome because he believes that the government’s plans to build the refinery in three years and at a cost of 8 billion dollars is «very optimistic.»
In addition to seeing a greater risk of delays and overcosts
Lee: More than 40 years ago Pemex built its latest refinery
«Our concern is validated around the Mexican government’s estimates were optimistic,» said Moody’s analyst Peter Speera.
The fact that it is now advancing the project under the supervision of Petroleos Mexicanos and the Secretariat of Energy, adds one more task for the management team of Pemex, which is already struggling to curb the fall in the production of crude oil and improve the existing refineries Estimated.
«This also raises the risk of delays and overdrafts of costs that could add more pressure to Pemex’s finances.»
While the employers ‘ Confederation of the Mexican Republic (Coparmex) said in a statement that «things can go wrong and therefore we urge the Federal government to stop along the way and reconsider the risks that this decision implies for Pemex, for Public finances and for Mexico. »
They detailed that it represents a risk that the most indebted oil company in the world «decides to undertake a project of this magnitude on its own.»
Lee: Dos Bocas Refinery obtains crude processing clearance for 30 years; Lack of environmental assessment
It also highlights that the Mexican government decided to replace specialized companies to develop this project.
The contest was limited to four participants: the Bechtel-Techint consortiums (United States, Italy-Argentina) and WorleyParsons-Jacobs (Australia-USA), as well as the companies Technip (France) and KBR (United States), but none complied with the Time and cost requirements, said the leftist leader.
The last time that Petroleos Mexicanos (Pemex) launched new refineries was 40 years ago, with the then President José López Portillo.
However, López Obrador assures that Pemex has the capacity to handle the work. «And we have a lot of technical capacity. There are Mexican expert refineries that give us the certainty that we will be able to have the technology, the technical elements to build the refinery, «said the president in his morning conference this Thursday.
The decision to declare deserted the bidding to build the refinery of Dos Bocas, Tabasco, can put «restless» investors, warned the president of the Concanaco-Servytur, José Manuel Lopez Campos.
You may be interested: Two mouths must be cancelled, investment has only a 2% chance of success: IMCO
«We are disturbed (the decision) in relation to the perception that we can have regarding the certainty of the long-term investments,» the leader of the Confederation of National Chambers of Commerce, services and tourism, argued at a press conference ( Concanaco-Servytur).
However, he said, «We respect the decisions of the President (…), but time will tell us of these decisions.»
López Campos considered that the measure requires a greater analysis of the real investment required to complete the project, because Pemex needs financial support for its situation, because an amount of eight billion dollars «is not clear to us.»
Is the president’s plan viable?
A study by the Mexican State Institute of Petroleum (IMP) released by the press in February ensures that the project would cost 14,740,000 dollars, almost twice the government’s calculation.
And this Thursday industry experts declared themselves disturbed by the change of tactics.
«I find it irresponsible, it is a total improvisation, they will not be able to do,» said AFP David Shields, consultant on energy issues.
Lee also: Nahle discards corruption in two mouths, although companies invited to the project have been accused of bribes
«A refinery requires a very high degree of detail in its design,» he said.
With shields coincides Miriam Grunstein, an expert in energy issues and researcher at the American Barker Institute.
«Clearly not going to be enough» to allocate 8 billion dollars for the construction of the plant, Grunstein said to Radio Centro.
«Especially in Mexico, where public works are expensive and onerous,» he said.
She believes that the decision to leave Pemex in the hands of the construction of the work is «puzzling» because «its capacities are others».
These resources, proposed Grunstein, should be channeled to «exploration and production»-areas where the company, one of the most indebted in the world, has serious problems.
The Fitch qualifier reduced its rating by the end of January on two steps, leaving it just one step away from the speculative or «junk» grade.
And in the first quarter of the year, the first under the Government of López Obrador, Pemex lost 1,876,000 dollars.
The oil company needs to increase its investments to reverse a prolonged decline in its production, which fell from 3.4 million barrels a day in 2004 to the average of 1.6 million today, according to a report.
The State enterprise has an excessive debt of 106.5 million dollars.
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Original source in Spanish

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