Pemex’s Dos Bocas Turns Into Mexico’s Refinery Nightmare

Natalia Katona

Natalia Katona is a freelance commodity analyst, based in the United Arab Emirates.

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• Mexico’s $20 billion flagship Dos Bocas refinery struggles to deliver three years after launch, despite being central to the country’s energy independence push.
• Southeast Mexico’s fragile power grid leaves Dos Bocas vulnerable to outages as May 2024 and August 2025 blackouts exposed systemic risks
• Mexico’s gasoline imports surged to 388,000 b/d in September, highest of the year — contradicting Dos Bocas’ self-sufficiency goals.

Mexico’s $20 billion Olmeca (more commonly known as Dos Bocas) refinery was built to be the centerpiece of the country’s drive for energy independence, but three years after its launch, the flagship project is struggling to deliver. Designed to process the country’s heavy Maya crude and reduce reliance on fuel imports, the refinery has faced repeated outages, logistical bottlenecks, and underwhelming output. Instead of easing Pemex’s financial burden, it risks deepening the company’s dependence on government support and turning into a costly liability.

Owned and operated by Petróleos Mexicanos (Pemex) – the second-largest refiner in Latin America and the eighth-largest worldwide – the refinery was presented as a cornerstone of national energy sovereignty. Announced with great fanfare in 2022, it marked Mexico’s first new refinery in four decades. With a nameplate capacity of 340,000 b/d making it the largest of Pemex’s 8 refinery plants, Dos Bocas was built specifically to process Maya, the country’s sulfur-rich heavy crude (20-21 degrees API). For President Andrés Manuel López Obrador and his successor Claudia Sheinbaum, it has been more than an industrial asset: it was a political emblem and a strategic bet on Pemex’s future.

Yet the reality of operating Mexico’s largest refinery has been a bumpy road so far. Despite an intended gasoline output capacity of 170,000 b/d (once both CDUs are up and running), the facility has never approached that level. Its highest production in June 2025 reached just under 79,000 b/d before falling to 41,000 b/d in August, barely a quarter of its designed gasoline production capacity (see the chart). The refinery has struggled with repeated interruptions, including a three-month shutdown in late 2024 when crude supplies failed quality standards due to water and salt contamination. In April 2025, a malfunction during electrical load balancing triggered a cascade of equipment failures that required more than a week to restart operations. In August, heavy rains led to power outages that disabled a key gasoline unit for several weeks, forcing Pemex to divert three tankers of Maya crude to its Deer Park refinery in Texas.

Such disruptions reflect a broader structural problem. Southeastern Mexico’s power grid is prone to instability, with long transmission corridors, limited redundancy, and high exposure to severe weather. Outages throughout the Yucatan Peninsula in May 2024 and September 2025 underscored the fragility of the system, leaving facilities such as Dos Bocas vulnerable to cascading failures. For a refinery of this scale, the lack of reliable power supply represents a critical operational risk.

 The refinery’s performance record reveals a telling paradox. At its peak in June 2025, Dos Bocas processed roughly 190,000 b/d of crude oil (see the chart). Since each of its two distillation columns has a design capacity of 170,000 barrels a day, this suggests that both units were already in operation if Pemex’s numbers are accurate. Technically, the refinery has shown it can run both columns, but the achievement was fleeting. Problems with unstable electricity supply and inconsistent crude quality prevent it from sustaining the necessary throughput. In practice, the facility has been unable to keep its units running steadily enough to match its theoretical capacity.

The consequences are visible in Mexico’s fuel import data. Far from reducing the country’s reliance on foreign gasoline, disruptions at Dos Bocas have coincided with an increase in purchases from abroad. Imports surged to 388,000 b/d in September, the highest level of the year and well above the 325,000 b/d average for 2025 to date. For a project intended to safeguard Mexico from volatility in global fuel markets, the outcome so far has been the opposite: the refinery’s instability has amplified dependence on imports rather than reducing it.

Logistics add further constraints. The refinery is not connected to the national pipeline network or main road corridors, forcing Pemex to rely on trucking and coastal shipping. Authorities have announced plans for a rail link connecting Dos Bocas to the Maya Train (and further on with the Interoceanic Corridor, intended to create a Gulf-to-Pacific trade route as an alternative to the Panama Canal). The project of a railroad connection to the Maya Train was initially set for completion in 2026, but construction works have not begun, and progress has yet to materialize. In the meantime, the refinery has relied on sporadic domestic shipments of diesel and gasoline starting from March 2025 (mainly to the Tuxpan terminal), and has only recently entered international markets, sending a 300,000-barrel cargo of diesel to the US (Florida) and Puerto Rico in March.

The economics of regional crude refining complicate matters further. Heavy Latin American grades have tightened in supply, with Venezuelan volumes absent, and U.S. refiners competing aggressively for any heavies still available. Differentials of Maya have been consistently rising between January and August 2025, making crude exports particularly lucrative. Pemex, however, has cut shipments abroad by more than 20% year-on-year, down to 620,000 b/d in August. The move was justified as a deliberate strategy to secure feedstock for domestic refining, especially for Dos Bocas.

Yet this narrative masks a more structural problem: Mexico’s crude output has been in steep decline. PEMEX’s production has fallen from 2.25 million b/d in August 2015 to just 1.37 million b/d by August 2025. The drop reflects both the natural exhaustion of mature oilfields and the national oil company’s limited investment in exploration and new developments. Compounding the issue, the quality of crude itself has deteriorated. Water and salt contamination in Maya crude has already disrupted operations, most visibly in the late 2024 shutdown at Dos Bocas. These factors limit not only the ability to export but also the reliability of supplies for Mexico’s refineries, undercutting the government’s stated goal of self-sufficiency.

The financial context adds up to the challenge. Pemex remains the world’s most indebted oil company, with obligations approaching $101 billion. Its financial balance is sustained only by repeated federal support, including capital injections, tax reductions, and debt refinancing. Dos Bocas was intended to reduce the company’s dependence on fuel imports and strengthen its cash flow, but persistent operational setbacks risk turning it into an additional liability.

For Sheinbaum’s administration, the refinery embodies both ambition and exposure. Success would represent a long-sought step toward self-sufficiency in refined products, reinforcing the political case for Mexico’s resource nationalism. Failure would underline the structural weaknesses of the country’s energy sector, leaving Pemex more financially fragile and dependent on state support. As it stands, Dos Bocas remains less a triumph of sovereignty than a reminder of how infrastructure ambitions can falter against technical fragility, logistical gaps, and the hard economics of global oil markets.

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By Natalia Katona for Oilprice.com

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