Mexico's Dos Bocas still in muddy waters after flooding

Mexican President Andrés Manuel López Obrador (AMLO) recently began providing what he said would be weekly updates on his government’s marquee energy project, the oil refinery at Dos Bocas in Tabasco state. 

The public updates mark the latest escalation in the controversial project, which has pitted the government against regulators, credit rating agencies and nature itself. 

The construction of the refinery, which began three months ago after AMLO dismissed private bidders after they submitted estimates he said were too high, is expected to be completed by state-owned oil company Pemex in 2021 at a total cost of at least US$8bn. 

Still, despite the fast-track nature of the project in AMLO’s home state of Tabasco, the government’s 2020 budget proposal allocated 41.3bn pesos to Dos Bocas, representing a 17% cut in annual expenditure compared to 2019. 

Even as budgeting weighs on the project, other problems in recent weeks have cropped up that threaten to bog down what would be Pemex’s seventh oil refinery.   

FLOODED WORK SITE

Three weeks ago, a series of photos on social media showing the Dos Bocas work site inundated drew a fresh round of questions about the feasibility of building an oil refinery in the low-lying, flood-prone area. 

In the government’s first scheduled update, energy secretary Rocío Nahle confirmed the news that the work site had been flooded in late October. “It’s a bad time, all week we had bad luck, but against the wind and tides work on the refinery is taking place,” Nahle said. 

AMLO sought to place part of the blame on a Dutch contractor tasked with filling land in the area. 

But the larger concern, one pointed out repeatedly over the years by academic researchers, the Mexican petroleum institute (IMP) and environmental law center Cemda, is that the land is prone to flooding. Moreover, the likelihood of flooding only increases when surrounding mangroves are removed. 

“One of the most flood-prone areas on the planet,” former president Felipe Calderón tweeted in response to the pictures on social media, pointing out that “the destroyed mangroves” were key to preventing tide swells and also served to take CO2 out of the environment. 

PEMEX MOVES TO CURB ENVIRONMENTAL REGULATIONS

“There’s a conditional authorization on the part of [environment and safety regulator] ASEA,” Pemex director general Octavio Romero Oropeza said two weeks ago: “We're going to do everything under the standards and that the law allows so that that conditionality is nullified and there is a correct and complete authorization.”

The August conditional authorization for Pemex to build the Dos Bocas refinery has been shrouded in controversy. 

It was the first authorization by the upstart regulator ASEA, and it came after Pemex had already destroyed 300ha of mangroves in the area without a permit in 2018.  

Then, shortly after the approval of the project, ASEA director general Luis Vera unexpectedly resigned from the post, giving no explanation as to why he was leaving. 

With the post still unfilled, rumors surfaced last week that onetime AMLO staffer Ángel Carrizales could be appointed by the president to fill the vacancy left by Vera’s departure. 

“We deny this account. We are completely unaware of it,” a spokesperson for Mexico’s natural resources department Semarnat told Forbes in recent days. 

But given that AMLO put forward Carrizales’ name five times to Mexico’s senate for a spot on the hydrocarbons commission CNH, the rumors persist that the loyalist could be placed in the post, increasing the likelihood that ASEA rubber-stamps Pemex’s plans. 

NAVY BASE PLANNED NEARBY

Rising numbers of pirate attacks on oil rigs off the waters of Campeche and Tabasco have led AMLO to order regular navy patrols of the waters off Dos Bocas. 

On November 12, pirates off the bay of Campeche took the crew of oil rig hostage, injuring several workers as the intruders pilfered the rig for equipment. 

“We’re attending to that,” AMLO said in his morning remarks on November 14. 

“At Dos Bocas, they're going to have a military base, run by the navy department, in order to attend to the entire Gulf [of Mexico] region,” the president said. “It's a plan from the navy that's going to include control over all ports.”