Mexico launches new oil refinery, denies solar permits

MEXICO CITY — The office of Mexican President Andrés Manuel López Obrador said Friday that the new Gulf coast oil refinery he ordered built is “a dream come true.”

López Obrador “inaugurated” the partially finished Olmeca oil refinery in Dos Bocas, a city in his home state of Tabasco. He bragged that his government had decided to ignore “the siren calls … that the oil era was over.”

His administration has been so committed to oil — and so opposed to private renewable energy schemes — that on Friday it also denied a request by German carmaker Audi to build a solar energy facility at one of its factories.

The refinery project, when finished, is expected to cost as much as $12 billion, well above original estimates of $9 billion.

In 2021, Mexico agreed to buy Shell’s 50% share in the jointly owned Deer Park refinery near Houston, Texas for about $600 million. The two refineries would have similar capacities, leading to questions about the much larger investment in building a new refinery.

The new refinery is part of López Obrador’s startegy of making Mexico self-sufficient in gasoline, which it has long imported. He noted Mexico had not built a new refinery since the 1970s.

The eventual opening of the plant comes as many energy companies are trying to exit the historically low-margin refining businesses, as demand for renewable energy increases.

“We did not pay attention to the siren calls, the voices that predicted, perhaps in good faith, that the oil era was over, and that electric cars and renewable energy was arriving massively,” López Obrador said.

Later Friday, the Environment Department announced that Audi Mexico’s request for permits to build a solar-panel array at its plant in the central state of Puebla had been denied on technical grounds.

López Obrador has passed laws limiting the amount of electricty that private gas and renewable energy facilities can sell, and putting them last in line for power purchasing, behind government-owned plants that often burndirty fuel oil.