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Foreign companies best able to build new Mexico refinery, president says

Mexican President Andres Manuel Lopez Obrador speaks on March 19, 2019, at his daily press conference at the National Palace in Mexico City, Mexico. Lopez Obrador defended the decision to allow just a handful of foreign companies to bid on construction of a new oil refinery, saying they are the ones best qualified to complete the project. EPA-EFE/Mario Guzman

Mexican President Andres Manuel Lopez Obrador speaks on March 19, 2019, at his daily press conference at the National Palace in Mexico City, Mexico. Lopez Obrador defended the decision to allow just a handful of foreign companies to bid on construction of a new oil refinery, saying they are the ones best qualified to complete the project. EPA-EFE/Mario Guzman

EFE

Mexico’s president on Tuesday defended the decision to allow just a handful of foreign companies to bid on construction of a new oil refinery, saying they are the ones best qualified to complete the project.

“They’re the world’s best. The four (participants in the auction) were selected based on a study, an investigation. These four have built 150 refineries apiece on average,” Andres Manuel Lopez Obrador said at his daily press conference at the National Palace in Mexico City.

Two consortia - the United States’ Bechtel with Italian-Argentine Techint and Australia’s WorleyParsons with US-based Jacobs Engineering Group - and a pair of sole participants, US-based KBR and United Kingdom-based TechnipFMC, have been invited to bid on the construction of the Dos Bocas refinery in the Gulf coast state of Tabasco, Mexico’s government said Monday.

“They’re the ones that have the most experience with refinery construction,” the leftist president said, adding that those companies were chosen “because with these very important projects we don’t want the company to not have the professional capacity.”

He added that these companies also have the “ethical dimension,” thus ensuring the project is not marred by schemes similar to the Odebrecht scandal or by “unfinished works.”

Odebrecht, a Brazilian-based global construction conglomerate, and its petrochemical unit Braskem reached a settlement in late 2016 with authorities in the US, Brazil and Switzerland arising out of their schemes to pay hundreds of millions of dollars in bribes to government officials around the world, the US Justice Department said then.

As part of that settlement, they pleaded guilty to the charges and agreed to pay a combined total penalty of at least $3.5 billion.

Lopez Obrador, however, said domestic companies will likely be involved in building the $8 billion refinery, which will be Mexico’s seventh and be owned and operated by state oil company Petroleos Mexicanos (Pemex).

“There a strong chance that there will be domestic companies (taking part in) this same refinery,” but the projects will be led by a foreign company or consortium.

“The idea is for the refinery to be built in three years, and it’s a big refinery,” the president said.

A day after marking the 81st anniversary of the nationalization of Mexico’s oil industry, Lopez Obrador said the ultimate aim was to strengthen Pemex (whose production monopoly was ended in a landmark 2013 energy-sector overhaul) and the national oil industry.

Pemex, which held around $106 billion in financial debt at the end of last year, is in a difficult situation due to, among other reasons, a steep drop in production to an average of just 1.71 million barrels per day in December (down from an average of 3.38 million bpd in 2004).

According to official estimates, the refinery will create 23,000 direct jobs and 100,000 indirect jobs.


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