Samsung clinches $3.6bn deal to build flagship Mexican refinery

Samsung Engineering announced on Friday that its joint venture with Mexico’s Asociados Constructores DBNR had signed a $3.6bn deal to work on the controversial Dos Bocas refinery in Tabasco State.

The award, which was made by a subsidiary of state-owned oil company Pemex, covers the second and third phases of the project.

These stages will add a diesel and a gasoil hydrodesulfurisation unit, a number of naphtha processing units and a catalytic cracking facility.

Samsung said its success was due to its performance on the first of the refinery’s six stages, which covered its front-end engineering design and the construction of the foundations.

The company commented in a press release: "This order is based on Samsung Engineering’s engineering competitiveness, which has been accumulated over a long period of time. We will successfully lead this project by utilising our refinery project knowledge and experience in the Mexican market."

Along with the Mayan railway, Dos Bocas is the flagship project of Mexican president Andrés Manuel López Obrador, who has set ambitious targets for its timetable and budget.

The bidders for the original tender offered to construct the plant in four-to-six years at a cost of between $10bn and $12bn, however Obrador insisted on a three-year construction period and a price of $8bn.

The refinery, which will be built near the southern town of Dos Bocas on Mexico’s Gulf Coast, includes 17 processing plants and 93 storage tanks, as well as access to highways, a rail line and docking for ships. It is expected to process 340,000 barrels of crude oil a day.

When complete, it will be Mexico’s seventh refinery, and the first to be built in the past 40 years.

Critics of the project have pointed out that Pemex is struggling with enormous debts, largely caused by losses in its refining division. The debts are valued at more than $106bn, and its refining facilities currently run at less than 40% of capacity.

The Mexican Institute for Competitiveness last year carried out a financial analysis of the scheme that estimated that there was a 98% chance that the refinery would generate more costs than benefits.

Earlier this month the IMF issued a recommendation that the project be postponed and the money earmarked for it diverted to "essential spending" on coronavirus relief projects.

Image: The oil port of Dos Bocas (ProtoplasmaKid/CC BY-SA 4.0) 

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