Incredibly, the Mexican Petroleum Institute (IMP) has just begun a public bidding process to contract “technical assistance in drawing up an evaluation” of how the Dos Bocas refinery project, in Tabasco state, is being carried out.
According to the bidding guidelines, the winning proposal, to be awarded at the end of this month, must provide “a preliminary evaluation of the project”, in order to “determine current conditions” and “propose strategies and measures to mitigate risks” for the project. Finally, the evaluation will be presented to state-run oil company Petróleos Mexicanos (Pemex), the builder of the refinery.
This amounts to admitting that the Dos Bocas project is lacking an accurate evaluation. It is quite inconceivable that the IMP should now request a third party to carry out a preliminary evaluation, a year and a half after the IMP itself carried out the official technical report for the refinery and has been working full time on site and doing basic engineering for the project.
Does the IMP really not have the prestige and the technical solvency to do this without the support of a third party? Did the IMP’s own technical report not, at least partially, provide this evaluation? Well, it did not, because its specialists simply ticked the box for a list of technologies and of hundreds of technical standards that could be applied to any refinery. The report did not provide much else. The IMP endorsed a refinery concept, rather than a specific Project, and just did the mínimum to comply with a requirement and keep on good terms with the López Obrador government.
On Monday, as she does every week in a video projected President López Obrador’s morning press conference, Energy Secretary Rocío Nahle, listed items of progress on the refinery project, but, just as the same as every Monday, only preparatory work at the site was mentioned, for instance, excavations, deliveries of steel and concrete, work on the foundations for storage tanks, spheres and buildings, construction of piles, roads and greenhouses. Who does she think she is kidding? The major equipment for the refinery plants themselves are notoriously absent in these videos.
Information is never given on progress in awarding, building or installing critical equipment for the refinery’s 17 processing plants. There is total silence in this regard. The critical equipment should be being built by now in industrial yards around the world, if the idea is to have the refinery operating two, three or even five years from now. A couple of years would be needed to fabricate the equipment with the longest delivery times, without mentioning the colossal logistical challenge implicit in transporting it to the site at Dos Bocas and installing it.
Apparently, there has been no progress on this yet. Nobody seems to know what is going on and, for that same reason, plenty of rumors are going around in the industry. For instance, it is said that the Energy ministry, with the support of technical staff at Pemex and the IMP, has been seeking to make secret verbal agreements with technology owners in several countries. There is also a persistent rumor that Kellogg Brown & Root, one of the three IPC contract holders at Dos Bocas, has been fired… or has thrown in the towel.
What is known with certainty is that Ms. Nahle said two months ago that there would be advance payments of over $3 billion Mexican pesos (roughly US $143 million) for procurement of critical equipment and plant modules. Have some companies already received these forward payments? What contractual commitments might they have made in exchange? Are such payments legal? Why does the Energy ministry not inform in detail about this, in order to put an end to speculation?
It is work that cannot be done as you go along, with improvisation and haste.
It would be appropriate –and I think I am not the first person to say so– that the National Engineering Academy were given the job of carrying out the wide-ranging professional and hopefully unbiased evaluation of the project that is required, so that all Mexicans can know whether this refinery project should move ahead, despite the country having other urgent priorities.
* David Shields is an energy industry analyst. His e-mail: firstname.lastname@example.org A Spanish version of this Op-Ed appeared first in Reforma’s newspaper print edition.