Bechtel, Jacobs, KBR invited to bid on $8B Mexican oil refinery

Dive Brief:

Mexico has invited several foreign companies, including three U.S. firms, to bid on the design and construction of state-owned oil company Pemex’s new $6 billion to $8 billion oil refinery near the Port of Dos Bocas in the Mexican state of Tabasco, Reuters reported. This will be Pemex’s seventh refinery in the country.
Among the companies that will bid on the project are Bechtel, as part of a consortium that includes Italian company Techint; Jacobs Engineering, in conjunction with Australia-based WorleyParsons; and Houston-based engineering and construction firm KBR. The project, which will include 17 processing plants, 93 storage tanks and associated infrastructure, already has been fully permitted.
Mexican officials said design and construction should take approximately three years even though other experts have commented that projects of this type usually take five to 10 years to complete.

Dive Insight:

The refinery is an initiative of the newly minted President Andres Manuel Lopez Obrador’s administration, so he is reportedly trying to fast-track it. In January, Lopez Obrador pulled the plug on construction of a new $13 billion airport outside Mexico City. At the time, the project was already 30% complete. Lopez Obrador pointed to the alleged corruption and high costs at the new airport, which is why the administration most likely made a point of mentioning that the new Pemex oil refinery would be graft-free.

Since the cancellation, carriers that fly into Mexico City have questioned the Mexican government’s plans to use the existing Mexico City airport and two other renovated airports, including an old military base, as a three-hub solution, Bloomberg reported. This would create security issues, according to the International Air Transport Association, and would create logistical challenges as the distance between airports is as much as 43 miles.

As of January 2018, according to the U.S. Energy Information Administration, there were 135 oil refineries in the U.S., the newest one being the Magellan Midstream Partners condensate splitter facility in Corpus Christi, Texas. That facility began operations in 2017. Despite upgrades and improvements at the existing refineries, the newest one with significant capacity is Marathon's Garyville, Louisiana, facility, which came online in 1977. That could change, though, if Meridian Energy can overcome public opposition to a planned facility in North Dakota.

The Meridian project has sparked protests in North Dakota because the company wants to build the $800 million facility 3 miles from Theodore Roosevelt National Park, according to the Associated Press. Meridian has promised the refinery will be as clean as possible, but many are concerned that construction and operations could interfere with the 700,000 people that visit the park each year.