Mexico will stop exporting crude oil in 2023 under a nationalist strategy of Andres Manuel Lopez Obrador in order to achieve self-sufficiency on the domestic fuels market.
Octavio Romero, chief executive officer of Petroleos Mexicanos in Mexico City, stated that the Mexican state-owned producer, known as Pemex will reduce crude oil exports by 435,000 barrels per day by 2022, before phasing out sales abroad in the following year.
Lopez Obrador is trying to increase Mexico's domestic fuel production rather than sending oil overseas. It also wants to reduce the imports of expensive refined products like gasoline and diesel. Mexico currently purchases the majority of its fuels from U.S.-based refineries.
If Pemex fulfills its pledge, it will be the end of one of the most prominent players in the international oil market. Pemex was exporting almost 1.9 million barrels per day to refineries in India and Japan at its peak in 2004. It also participated as an observer in meetings of the Organization of Petroleum Exporting Countries.
According to Pemex data, Mexico sold slightly more than 1 million barrels per day abroad last month.
Romero stated that the export reduction will occur as Pemex improves its domestic crude processing. This will increase to 1.51 million barrels per day in 2022, and 2 million daily in 2023. All of the production will be pumped into six Mexican refineries by the Mexican driller, which include a Tabasco facility that is currently under construction and one being purchased near Houston, Texas. Even though it is located in Mexico, this plant is still considered part of Mexico’s refinery system.
The bulk of the reductions in exports will be borne by Asian refineries which account for over 25% of Mexican crude oil exports. As Pemex reverses earlier plans to diversify away the U.S. market, the reductions will be most severe for South Korean and Indian refiners.