Pemex, Mitsui reportedly close to refinery deal

Mexico's Pemex is reportedly close to a deal with a group led by Japanese company Mitsui to increase capacity at the federal oil company's Tula refinery (pictured) in Hidalgo state.

The expansion would ramp up the refinery's production by 40% and would involve a US$2.6bn investment, local daily El Financiero reported.

This deal would reduce Mexico's dependence on fuel imports from the US, which are expected to rise as fuel demand increases and as the country's energy reform has paved the way for foreign participation in the fuel sector.

Also read: New US refineries to boost gasoline exports to Mexico

"We are focusing our attention on the Tula project," Carlos Murrieta, director of Pemex Transformación Industrial, was quoted as saying by Bloomberg.

"We need to discuss many things, but we are close to closing the deal."

The consortium headed by Mitsui also includes Compañía Española de Petróleos and a JV between Mexican company ICA and US firm Fluor, according to the report.

The project would involve one of the largest investments in the Mexican refining sector since the energy reform.

Mexico's fuel imports currently account for 68% of total consumption, compared with 30% in 2007, highlighting the need for the country to increase refining capacity.

Rodrigo Favela Fierro, a partner at HCX, said during a conference in Mexico City this week that building new refineries in Mexico is an attractive proposition for the private sector and would allow the country to increase its margins in fuel production.