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febrero 24, 2020
English Especiales Fluvio Ruiz

Energy security and refining

Petróleo texano avanza por segunda jornada sobre los 50 dólares

By: Fluvio Ruiz Alarcón

In the 2000-2017 timeframe, the national deficit between production and consumption of petroleum products deepened: consumption grew at a rate of 1.3% per year and production fell at a rate of 2.8%. As a result, the oil trade scale became negative. Crude oil exports are no longer sufficient to cover imports of derivative products. Last year alone, Pemex spent 32.593 billion dollars on refined imports; 3.288 billion dollars had to be covered from the negative balance of the oil trade scale.

On the other hand, almost 50% of the final consumption of energy in Mexico is used to transport people and goods. Out of that amount, petroleum products represent 99.7%. This means that the substitution of this type of fuels for more environmentally friendly ones will be costly and will last for decades. According to figures from the International Energy Agency, it took forty years for all the world’s economies to reduce the primary consumption of fossil fuels by 5%. In other words, for multiple reasons (vested interests, the rigidity of technological paths, institutional weaknesses, etc.), the inertia of economic models, production systems and consumption patterns is greater than estimated by optimistic projections of the energy transition.

Therefore, it is very important that the current government has as one of its strategic objectives, to reduce the enormous dependence we have on fuels. This is of such magnitude, that we can say that we are in a situation of real vulnerability. According to the French academic Jacques Percebois, energy vulnerability differs from energy dependence, since one can be dependent without being vulnerable. «A country that imports most of its energy, but at an affordable price and guaranteeing the security of supply through adequate diversification of supply sources, will be dependent but not vulnerable. Mexico is a vulnerable country, because the vast majority of imports come from the United States of America, since the establishment of a subordinate integration model that, for these days, has shown its worst side.

In this sense, the construction of new refining trains is necessary for energy security. The expansion of production capacity, the optimization of the National Refining System and the implementation of measures to contain demand may reduce the imbalances between the supply and demand of fuels, induced by a short-term extractive and financial vision. It is therefore imperative that the government does not confuse tenacity in achieving this vital objective with the obstinacy of building a new refinery in a predetermined location; rather than for technical reasons, for understandable aspirations of social justice and regional equity. If the risks involving the Dos Bocas project, and the works, costs and times associated with its mitigation were to come up with another location more preferable, the alternate option would have to be seriously considered.

In terms of refining, the fundamental thing is to achieve the best operation of the production, storage and distribution system as a whole and, above all, to start building the road that takes us away from vulnerability, away from dependence and, at the end, towards the supply security.

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