Mexico Signals the Death of the Mesoamerican Refinery

Sunday, June 10 2007 @ 08:25 AM UTC

Contributed by: Don Winner

By Yennifer Bolivar for La Estrella - Although Panama hopes to be selected as the site for the construction of the Mesoamerican refinery proposed by Mexico, the Mexican ambassador to Panama, Ricardo Alemán, warned in an interview with the El Universal newspaper that "a third refinery in the region would be to many." According to the interview which was picked up by the EFE news agency, Alemán said the project fell through after Mexico announced they would reduce their supply to the proposed refinery with respect to the level announced initially. Alemán considers the development of this refinery, proposed within the framework of Plan Puebla Panama (PPP) as unnecessary because Nicaragua and Panama already have their own plans to build petroleum refineries. Panama, Guatemala and Costa Rica all hope to have the multi billion dollar refinery built in their countries, and are awaiting the decision of investors.

Editor's Comment: Ok, here's the Central American refinery scorecard. Pemex started this whole refinery thing about two years ago when gas prices started to rise. The real squeeze isn't so much from a shortage of crude as it is from a shortage of refinery capacity. So, it makes good sense to build a new refinery somewhere, and Panama doesn't have all of the tight environmental controls and requirements that exist in the United States, and the same is true for Guatemala and Costa Rica. So, it comes down to where does it make the most sense to build the new Mexican "Mesoamerican" refinery. The Mexicans initially said they would support the new refinery with something like 380,000 barrels. In response to the Mexican proposal Hugo Chavez showed up in Panama and, not to be outdone, said he would build a refinery in Panama. But then Danny Ortega won the Presidential election in Nicaragua so now Chavez says he will build a refinery there. Chavez is a whack-job and I don't trust anything that comes out of his mouth, so the Nicaragua refinery thing is probably just smoke.

Oxy and Dubai are going to build a refinery in Panama -- that's an $8 billion dollar reality. These comments by the Mexican ambassador might be signaling something, or he might be way out there in left field someplace. It's kinda hard to tell. Reality is that refineries are good business right now and are making a lot of money. Panama is still only 50 miles wide and you can (relatively) easily build a pipeline to port facilities on both coasts to pump crude into the refinery and end products out. Or, it might make more economic sense to do it with tankers through the canal (ask an oil executive.)

Embajador de Panamá en México desestima refinería

Yennifer Bolivar

A pesar de que Panamá se mantiene a la espera de ser seleccionada para la construcción de la refinería mesoamericana propuesta por México, el embajador de nuestro país en México, Ricardo Alemán, advirtió en una entrevista dada al diario El Universal, que “una tercera refinería en la región estaría de más”.

Según la entrevista reproducida por la agencia de noticias EFE, Alemán reconoce que el proyecto “fracasó”, tras el anuncio de México de reducir su oferta de suministro de crudo para ese proyecto respecto a la anunciada inicialmente.

Alemán considera innecesario el desarrollo de esta refinería, pactada en el marco del Plan Puebla Panamá (PPP), porque Nicaragua y Panamá poseen ya sus propios planes de refinamiento de petróleo.

Panamá, Guatemala y Costa Rica se disputan la sede del millonario proyecto que se mantiene a la espera de la decisión de los inversionistas.

Panama Guide