President Andrés Manuel López Obrador announced that his administration will create a plan to “refine more and import less” crude oil, with the aim to overcome the crisis.
The president of Mexico, Andrés Manuel López Obrador, announced that the country will cut the production of oil, closed wells, and will increase the refining capacity of the plants, to cope with the crisis arising from the fall in oil prices at the international level.
“At the end of this month starts the crop production that is agreed to in the world, and this must have some effect, anyway we are preparing a strategy that consists in refine more crude oil to buy gasoline abroad”, explained the president in his press conference the morning of April 22.
The president made allusion to the agreement reached within the Organization of the Petroleum Exporting Countries (OPEC) on the 10th of April last, in which, Mexico has promised to reduce by 100,000 barrels per day production of crude oil.
Lopez Obrador said that his administration had two hits to help mitigate the crisis. The first, is that the start of exploration in 19 oil fields, and drilling over 200 new wells that are already substantially completed, enables the mexican Government to “close the valve of these wells without loss of pressure”.
The second thing, was the plan to rehabilitate the refineries to be put in motion from the beginning of his management, but will strengthen in the next few weeks. “Since we arrived we decided to rehabilitate the refineries, we already have tools, equipment, authorized this year’s budget of 10,000 million pesos (411 million dollars) extra and this will allow us to go forward in the volume of refining,” he said.
He pointed out that two days ago, the six refineries in the country processed approximately 800,000 barrels of crude oil, which implies a capacity of refining at 60%. the production of domestic crude oil.
Another factor that according to the López Obrador helped to decrease the impacts of the crisis, it is the acquisition of insurance that allow Mexico to receive additional income, despite the collapse of international prices.
Although it is planned to submit on Wednesday the energy plan to overcome the oil crisis, the president noted that such a plan will be announced until the next Friday 24 of April, because cabinet is still doing the necessary analysis before a scenario is very volatile.
Decree to help Pemex
In other measures, the ministry of Finance will grant a fiscal stimulus for 65.000 million pesos (2.674 million dollars) to the state company Petróleos Mexicanos (Pemex), to mitigate the negative impact on their finances.
For this reason, the dependence was published in the Official Journal of the Federation a decree by which it reduces the percentage that the company pays to the State for the Right of Utility is Shared. This represents slightly more than 80 % of the taxes paid by the oil company by crude oil production.
The revenue that Mexico receives for the oil is one of the main components in the formation of the annual budget with the financed public works and basic services.
Last Tuesday, the price of the mexican mix of oil reached the first negative value of their story, as quoted in -2,37 dollars per barrel, according to preliminary data from Pemex. However, hours after rebounded to reach 7,12 dollars per barrel.
The fall of oil prices in the U.S. will cause this country care less about mexican oil, which will have effects on the entire mexican economy.
According to a recent report of the Economic Commission for Latin America (Eclac), the Gross Domestic Product of Mexico recorded a fall of 6.5 %, which is the second most rugged of the region, only behind Venezuela.
More information, in brief.