Outlook of the Refinining Industry in Mexico

Challenges and Projects

Enrique Aguilar Rodríguez

Instituto Mexicano de Ingenieros Químicos (IMIQ)

August 2013
 Content

The Structure of the Refining Industry in Mexico

 Constitutional Mandate and Petróleos Mexicanos Mission
Constitutional Mandate
Article 27
Corresponds to the nation the direct
ownership of mineral, solid fuels, crude
oil and all the hydrogen carbides, solid,
liquid or gaseous, and the land above
the national territory, in the extension
and terms fixed by the international law
Pemex Mission
Maximize the economic value of the
hydrocarbons ad derivatives in order to
contribute to the sustainable
development of the country
The Ruling Law ARTICLE 1.-
Corresponds toThe Nation the direct
and inalienable domain of all the
hydrogen carbides located in the
national territory, including the
continental platform or offshore
deposits, whatever their physical state,
1 2 including the intermediate states that
make up the crude mineral oil, that
accompany or derive from it.
4 3 The Ruling Law ARTICLE 2.
Only the Nation will carry out the different
explotations of the hydrocarbnos that make up
the petroleum industry
 Pemex Position in the Oil Industry

• 9th largest integrated oil and gas

company worldwide
• 3rd largest crude oil producer
• 9th in crude oil reserves.
• Proven reserves equivalent to more
than 12 years of production
• 15th in gas production
• Sole producer of crude oil,
natural gas and refined
products in Mexico
•Sole marketer of refined
products in Mexico
•Generates 30-40% of fiscal
income in the country

• 14th in refining capacity

• Revenues of more than 70 billion

dollars in 2010
 Pemex-Refining Position in the World Market

Distillates Markets by Country

Main Refining Companies2009(1)
2009(2)

Refining Capacity (MBPD) Distillates Consumption (BPD)

1. ExxonMobil 6,271 1. United States 17,029

2. Sinopec 4,559 2. China 7,979
3. Royal Dutch Shell 3,639 3. Japan 3,875 Pemex-Refining :
4. PDVSA 3,035 4. India 3,001
5. CNPC 2,913 5. Russia 2,705 ■ 14th largest company in
6. ConocoPhillips 2,902 6. Germany 2,513 Refining Capacity
7. BP 2,666 7. South Korea 2,082
■ 10th largest country in
8. Total 2,594 8. Brasil 1,968
Distillates Market
9. Saudi Aramco 2,374 9. France 1,918
10. Petrobras 2,161 10. México(3) 1,722 ■ 43% of Pemex Total Sales(3)
11. Chevron 2,158 11. Canada 1,761
12. Petrobras 1,997 12. Iran 1,613
13. NIOC 1,566 13. Italy 1,511
14. Pemex(3) 1,540 14. Great Britain 1,500
15. Repsol YPF 1,259 15. Saudi Arabia 1,471

(1) Energy Intelligence, PIW, Dec. 2010

(2) Purvin & Gertz, 2010 Global Petroleum Market Outlook, 2010
(3) Pemex, Indicadores Económicos al 31 de diciembre de 2009
 Pemex Refining Current Facilities(1)

Oil Pipelines 5,181 km

Refineries Poliducts 8,958 km
Terminals
Inland Storage
77
Pipelines Terminals
Off shore routes Off shore Terminals 15
Gas Stations 9,311(2)
Car Tanks 525 and 337 leased
Cadereyta 1,360 (on-site)
AutoTanks
• 275 Mbd 2,805 leased
• Coker Ship Tanks 11 and 9 leased

Cd. Madero
• 190 Mbd
• Coker
Salamanca Minatitlán
• 245 Mbd • 185 Mbd
• FCC + Lubs • FCC - Coker

Tula
• 315 Mbd
• FCC Alk H-Oil
Salina Cruz
• 330 Mbd
• FCC Alk
(1) Tame, M. LI IMIQ National Meeting, Puebla, México. October, 2011
(2) Data for March, 2011
 Crude Slate in Mexico

Light Isthmus
Crude Crude Production
Producción (1)
de Crudo (1)
33.1 oAPI
4000
3500
3000 925
Heavy Maya 946
1012
Ligero
1036
2500

M BPD
Total Reserves Crude
2000 1180
22.1 oAPI Pesado +
1500
2458 2387 2244
ExtraPesado
1000 2045
1404
500
Extra-Heavy
0
KMZ Crude
2004 2005 2006 2007 2010
12.2 oAPI

(1) Diagnóstico, Situación de Pemex, Pemex, Marzo de 2008, updated to January 2011
 Content

Economical and Strategic Issues

 Pemex Contribution to the Fiscal Federal Income

Annual Average 13.7 -0.7

Growth % (2001-2005) (2005-2010)
33 33 33 33 32 32

28

22
20

14

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

9
Source: CAPEM, México, marzo 2010.
 Mexico: Fuels Use by Sector, 2009

MMBPD

1.36
1.8
1.8 Crude Exports Distribution by Sector
120
%

100 5
4
Non-Energy
80 19 use
Crude Production Agriculture
AA Proceso
CrudeProceso
domestic
1.3 1.22 60
1.3
processing 27 Residential &
2.58
3.3
3.3 Public Use
1.22
Elaboración
Elaboración 40 Industry
1.3
1.3
Transportation
20 45

Sources: Balance Nacional de Energía, 2010, SENER, Anuario Estadístico Pemex. 2011
 Supply/Demand Issues in Mexican Refining Structure

Current Capacity does not meet the demand needs and the
distribution network to the Central Mexico Area is saturated.

Imports
Gasoline
Gasoline 718 432
446
793
802
(MBPD 2010
MBPD 2009)
370

Exports
Fuel Oil
Fuel Oil
MBPD 2009)
(MBPD 2010 279 317

-38
Demand Supply Balance

Refining is a bussiness with low margins and high investment so its

Key factors for competitiviness is based on:
the Refining – High Operational performance
Economics in – Efficient use of resources
Mexico – High Project Execution performance
– Smart Management of Cyclic and Seasonal markets
11
 Mexico: Domestic Distillates Demand (MBPD)

AAGR, %
Real Pronóstico(1) 2000-2011 2011-2016
1,800
Gasoline
-0.26 6.94
1,600 Premium
1,400
Gasoline Premium Gasoline
1,200 Gasoline Regular 4.59 4.06
Regular
1,000
800 Jet Fuel 0.07 4.60
600 JetFuel
400 Diesel 2.90 3.04
Diesel
200 Fuel Oil
Fuel Oil -8.90 -6.20
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

■ Distillates demand higher than Economy growing rate

■ Deficit on gasoline and surplus of Fuel Oil
■ Growing consumption of ULS Distillates

Source: Pronóstico Pemex, Estudio de Mercado de Hidrocarburos 2011

 Mexico: The Gasoline Supply Issues

Supply Deficit of
the Domestic
Market and
surplus of Fuel Oil
Production

Fuel Oil demand Distillates demand

will keep
decreasing due to
Gasoline higher than GIP
while Domestic
Natural Gas use ion Market Production remains
Power Plants constant

Gasoline Demand is
expected to keep
growing
 Gasoline Consumption Rate increase in Mexico

Valor de las Importaciones Mensuales

Monthly Gasoline Imports
de Gasolina en México

1,200
Millones de Dólares/mes

1,000 Since 2007

800 the domestic
gasoline
600 demand has
400 grown
unexpectedly
200
high
0
3 4 4 5 5 6 6 7 7
c-0 n -0 c-0 n -0 c-0 n -0 c-0 n -0 c-0
Di Ju Di Ju Di Ju Di Ju Di
Mes
 Importaciones de Gasolina
Gasoline Importscomo
%%deofVentas
Crudepor Exportación
Export Sales inde Crudo
Mexico
40
35
30 Gasoline
imports
25
represent
20 about 35% of
15 crude export
income
10
5
0
3 4 5 6 7 8 9 10
 Producción y Consumo
Supply/Demand deProducts (1)
of Refining
Productos de Refinación en 2006

7,000
Miles de Barriles por Día .

6,000
México The strategy
5,000
does not around the
4,000 Consumo
Demand world is to
3,000 Supply
Producción produce at
2,000 least the
1,000
fuels
consumed
0
by the
ita

ia
ia

a
a

na

n
o

l
a

si

domestic
ci
ad
el

pó

an
ic

d
d

ra

hi

an
In
u
éx

au

an

m
Ja
ez

Fr
M

le
S

market
C
en

A
a
V

bi
ra
A

China and India carry

out aggresive refining
expansion projects

(1) Source: EIA, 2009

 Refining Capacity Growth in the World
(M BPD)

% Growth
País 1995 2005 2010 (1995- 2010)

United Arab Emirates 220 620 673 206

Taiwan 732 1,159 1,197 64

China 4,014 7,165 10,121 152
India 1,133 2,558 3,703 227
South Korea 1,727 2,598 2,712 57
Irak 660 743 856 30
Thailand 477 1,078 1,253 163
Brasil 1,481 1,849 2,095 41

USA 15,333 16,595 17,594 15

Mexico 1,444 1,481 1,463 0.1

1 Statistical Review of World Energy 2011, BP.

 Current Situation: A higher and growing domestic demand

14%
Predicted

Imports 47%
Consumption

Pemex 336 378

Forecast 2006
Predicted
Productionn

13%

Consumption

Production

Memoria de Labores de Pemex, 2010

 Gasoline Imports in Mexico

M BPD

Year

Memoria de Labores de Pemex, 2010

 Gasoline Imports in Mexico

MM USD/year

Cost of a New
300,000 BPD
Refinery

Year

Memoria de Labores de Pemex, 2010

 Pemex Strategic Business Lines

■ Improve the performance

Operational and Reliability of
Efficiency Operations

Maximize
Value Added Corporate Social
Growth under Responsability
Sustainability
■ Take actions to face ■ To improve relationships with
the increasing refining customers and suppliers
products demand
■ Safety and Sustainability as key
■ Include Technology as Efficient drivers in Operations
a tool for creating Managemenet
competitive
advantages ■ Improve Business Processes
■ Increase managemenet empowerment
■ Speed up operational decision making
 Pemex Strategies to Develop the Refining Industry

Develop new Infrastructure Projects

LOGRAR Develop High

Grow under Skilled Human
sustainablity Resources
criteria
 Increase Margin through higher refining capacity
and more complex configuration

Refining margins Gulf Coast* • Investment must be applied to high conversion

US$/b schemes to improve margins through higher
20 distillates yields and zero fuel oil production
with processing of low quality crude feedstock

15 Average
Average 2006-2015 • Minatitlán Reconfiguration,
1995-2005 7.5 US$/b completed.
5.0 US$/b Refineries
10 Reconfiguration • Residual Conversion
projects (Delayed Coking)
at Salamanca and Salina
5 Heavy Maya Cruz.
Coker Scheme

0 Increase import • Modernization of current

Light Istmus Facilities infrastructure for future
FCC Scheme supply increase
-5
1995 1999 2003 2007 2011 2015

• Margins will keep above the historical behaivor in the

long-term Nueva Tula • Increase crude processing
Refinery and distillate yield
* US Gulf Coast
Source: Global Petroleum Market Outlook 2006. Purvin & Gertz
 On- Going Strategic Projects – Grand Vision

Increase Heavy Crude Processing

Reduce Residual
3 2
production and increase Produce ULSG and ULSD
distillates yields

1
1
Crude Slate with 1 1 3 New Refining 1 3
3 Train at Tula 2
60% Heavy Crude Residual
in the National 250 MBPD
2 Conversion Project
Refining System Minatitlan Refinery + Residue Reconfiguration
at
Reconfiguration to Processing of the Salina
Production of Salamanca Cruz Refinery
process a Crude From the
ULS Fuels Refinery to process
Slate with 70% existing Tula
Vaccum residue
Heavy Crude Refinery

2010 2011 2016 2017

 Mexico: Gasoline Supply Increase with New Projects

Main Projects 2012-2017 Gasoline Domestic Market

MBPD
Real Forecast
1,200
AAGR 2011-2016
1,000 AAGR 2007-2011 4.5%
3.7%
Demanda
800
Supply Increase with
Current Projects
600 New Tula
Salamanca Refinery

Tula 400
Minatitlan Salamanca
Minatitlán Reconfiguration Reconfiguration
Current Supply
200

Reconfiguración -
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
New Processing Capacity
Imports, %
Current Operation 40.0 43.1 40.5 47.1 46.7 46.9 47.7 50.5 52.3 54.2 57.7
With New Projects 40.0 43.1 40.5 47.1 43.4 38.7 40.3 39.5 42 35.3 32.5
 Gasoline Supply/Demand Balance in México

Producción
Supply Demanda
Demand
New Tula
Salamanca Refinería
1000 Salina Cruz 181
Tula
Minatitlán: 64
800

600

400

200

0
1995 2000 2005 2011 2015 2016

Source: “Diagnóstico: Situación de Pemex”, Pemex, 2008 (updated by the author)

 Content

Features of the Expansion Projects

Expansion and Modernization of the
Transportation and Storage Systems
 Expansion and Modernization of the
Transportation and Storage Systems

Objectives

 Construction and integral revamp of the existing Pipeline System

and Storage TerminalsSystem

 Increase Safety in Transportation and Storage Operations

Investment:

520 MMUSD (includes Terminals, Pipelines, Dynamic Equipment and

Pump Stations

Schedule:
3 years

Workforce and Employment:

2,800 direct and 10,000 indirect jobs de la inversión considerada.

29
ULS Gasoline and Diesel
Production Project
ULSG Production Projects (Investment = 2,100 MMUSD)

BAJA CALIFORNIA

SONORA

CHIHUAHUA

BAJA CALIFORNIA SUR Cadereyta

• 1 GHDT 42,5 MBPD
• 1 Amine Regeneration Unit
COAHUILA

SINALOA Cadereyta
DURANGO NUEVO LEON

TAMAULIPAS
Madero
• 2 GHDT 20 MBPD
• 2 Amine Regeneration Unit
ZACATECAS

SAN LUIS POTOSI

Madero
Salamanca NAYARIT
AGUSCALIENTES

• 1 GHDT 25 MBPD GUANAJUATO Minatitlán YUCATAN

• 1 Amine Regeneration Unit QUERETARO

• 1 GHDT 25 MBPD
JALISCO
Salamanca HIDALGO
• 1 Amine Regeneration Unit QUINTANA ROO

COLIMA
EDO. MEX.
Tula
D.F.
TLAXCALA
VERACRUZ
CAMPECHE

Tula
MICHOACAN
PUEBLA
MORELOS

• 1 GHDT 32 MBPD
TABASCO

Minatitlán
• 1 Amine Regeneration Unit GUERRERO OAXACA

CHIAPAS

Salina Cruz
Salina Cruz
• 2 GHDT 25 MBPD 31
• 2 Amine Regeneration Unit
ULSD Production Projects (Investment = 4,550 MMUSD)

 5 brand-new DHDT (153 MBPD)

 18 Revamped Units
 Amine Regeneration Units
 Hydrogen Production Units
Residual Conversion Project (RCP)
Salamanca Refinery
 Objective

Pemex-Refinación will carry out a project

focused to reduce the production of
Residuals at the Salamanca Refinery.

The main target is to increase the gasoline

and diesel yields and minimize the Fuel Oil
production down to just fulfill the self
consumption needs.
 Production Target

Total distillates
131 187
10
(gasoline, jet fuel and diesel)
7
Paraffins and Lube Bases

63
Distillates 87 Gasoline
Production
(MBPD 61

89 Diesel and JetFuel

53
3 Fuel Oil and Asphalt

Salamanca Actual
Current Operation Salamanca
RCP
(2008)
(2008) Reconfigurada

Crude Processing Capacity (MBPD) 192 218

Maya Heavy Crude 22% 26% (1)

(1) % Maya refers to the total processing at the Refinery. Maya % in the energetic train amounts to 35%.

35
 Refinery Configuration RCP

C5-C6 Isomerization Existing Units

Lube Train New Units

Naphtha HDT Reforming
Revamp
CCR Reformer
Crude Oil HDT Coker naphtha
11 MBPD Fuels Quality

To Middle Distillates
Middle Dist. HDT Pool

Distillation Middle Dist. HDT Gasoline

MTBE Alkylation
ULS Pool

Cat
Gasoil HDT Naphtha
Vaccum FCC 25 MBPD
57 MBPD Post-
Distillation
Treatment
Coker
H-Oil Gasoil
Middle
Diesel HDS
Vaccum
Distillate
ULSD
Residue Pool
Delayed Coker
44 MBPD Coker Naphtha
Sulfur Recovery To Reformer
HDT Blending
Hydrogen Unit 8.8 MBPD
Coke
36
192 MBPD Crude Oil
65 Isthmus/35 Maya 61 MBPD Diesel
Current Configuration
63 MBPD Gasoline

40 MBPD
FCC Unit
53 MBPD Gasoil
Residuals

El Proyecto de Reducción de Residuales

 New and Revamped Units in the RCP

New Units:
• Delayed Coker 44,000 BPD
• Coker Naphtha HDT 8,800 BPD
• Gasoil HDT 57,000 BPD
• CCR Naphtha Reformer 11,000 BPD
• Sulfur Recovery 300 TPD
• Hydrogen Production 100 MMPCSD
• Sour Water Treatment 30,000 BPD

Revamps:
• FCC 40,000 a 50,000 BPD
• Lube Train 8,800 BPSD
 RCP Configuration

Other HDT Units and

Sour Water Unit Sulfur Recovery

Vaccum Hydrotreated
Residue from
VGO Gasoil
Lube Train (400 ppm S)

CGO
Residue Delayed Coker Gasoil HDT FCC

Slops

To H2 Ring

Natural Gas H2

Plantas Incluidas
 Other Projects in the Salamanca
Reconfiguration

■ The RCP will be carried out simultaneously to other projects to get sinergy in terms of
economics and opeartional logistics

Compliance of ■ The Mexican Environmental Standard NOM-148-SEMARNAT-2006, requires a

Environmental sulfur recovery at refineries of 90% min.
Regulations ■ The project includes the installation of a High Recovery SubDew Point Sulfur
(NOM-148) Unit.

■ Includes a naphtha PosTreatment Unit, a New and 3 revamps of Middle

Fuel Quality Distillates HDT Units as well as periphericals.
(NOM-086)

■ Two-phase Cogeneración with the Federal Electricity Commission (CFE).

■ Generation of 360 - 460 MW.
Cogeneration ■ 660 t/h Steam Import from CFE.
■ Natural Gas Supply by CFE from the Pacific Coast (Manzanillo),
 Salamanca Project Schedule

2008 2009 2010 2011 2012 2013 2014 2015

Business Case

Conceptual Engineering

Technology Selection

Development of Basic
Engineering and FEED
(FEL II y III) - PMC
Preparation of bases
for bidding

EPC Bidding

EPC Execution

Start up and operation

stabilization

41
Tula New Refinery Project
 Tula New Refinery Project

• Pemex-Refinación will install a brand new Refinery at

Tula, Mexico which will process 250,000 BPD Crude
(100% Maya).

• The main target is to increase the distillates productions

with maximum gasoline and diesel yields through a
“bottom of the barrel” scheme with minimum residual
production.
 Processing Capacity = 250 MBPD (Maya Crude) Product Yield (MBPD)
LPG 7.6
Propylene 8.4
Gasoline 161
Diesel/JetFuel 125

Gas-Liq Butanes to ALK

SAT.GAS
from LN to HDS N ISOM C5/C6
FRACTIONATION
Process
Plants
HDS N1
CCR REFORMER
HDS N2

SULFUR RECOVERY 840 TPD

HDS K

HDSD 1
ATM + VACUMM
250 MBPD DISTILLATION

HDSD 2 B-B ISOM nC4

ALK
96 MBPD
HDS G FCC
B-B
P-P from
COKER 1
from COKERS
75.7 MBPD Cokers
COKER 2

Vacumm Residue + Slurry to HDS N

from Existing Refinery H2
General Process Scheme
for the New Tula Refinery
 Mexican Gasoline Specification

Specifications (%vol max)

Metropolitan areas Rest of the country
Gasoline in ZMCM ZMG ZMM RP
Mexico Premium Regular
(Standard ■ Aromatics 25 35 35 35 --
NOM-086- ■ Benzene 1 1 1 2 3
ECOL-1994) ■ Olefins 10 12.5 12.5 15 --
■ Oxygen 2.7 2.7 2.7 2.7 --
(%wt máx)

Gasoline Specification
 Gasoline Pool Structure, Tula New Refinery

6M
“Clean octane” + Oxygen +
RVP
Ethanel

48M
22M “Clean octane” vs. RVP
Isomerization
Premium

48M Barrel + Octane +

Naphtha Reforming
Aromatics+Benzene
Gasoline
161 M
162M
Delayed Coking
19M
110M Clean octane
GO HDT Alkylation
Regular
63M
FCC 113 M

Barril + Octano “Sucio”

sulphur + Olefins
3M
Butanes
“Clean octane” + RVP
 New Units and Processing Capacities

BPSD

• Naphtha Reforming 57,300

• C5/C6 Isomerization 23,200
• Gasoil Hydrotreater 109,600
• FCC 96,000
• Delayed Coking 160,000
• Coker Naphtha Hydrotreater 29,200
• Sulphur recovery 1,300 TPD
• Hydrogen Production 160 MMSCFD
Feedstock:
Crude Oil 250,000 BPSD
Products
From Existing refinery:
Fuel gas 3,298 MMBtu/hr
Vaccum Resid 73,684 BPSD
Propylene (Chem. Grad) 8,411 BPSD
FCC Slurry 2,034 BPSD
LPG 7,661 BPSD
LCO (diluent) 10,000 BPSD
Magna ZMVM 65,481BPSD
Natural Gas (for H2 Plant) 49 MMSCFD
Premium ZMVM 23,009 BPSD
Iso-Butane 5,329 BPSD
Magna Rest of the country 47,416 BPSD
Ethanol 4,223 BPSD
Premium Rest of the country 25,014 BPSD
Jet fuel 10,443 BPSD
Pemex Diesel 125,187 BPSD
Coke 8,326 Ton/d
Sulphur 1,248 Ton/d
LCO ( as a diluent) 10,000 BPSD
 Tula New Refinery Project Schedule

2008 2009 2010 2011 2012 2013 2014 2015

Business Case

Conceptual Engineering

Technology Selection

Development of Basic
Engineering and FEED
(FEL II y III) - PMC
Preparation of bases
for bidding

EPC Bidding

EPC Execution

Start up and operation

stabilization
Energy Efficiency and Environmental
Mitigation Projects
 Energy Efficiency and Environmental Mitigation Initiatives
Operational Distribution
Cogeneration
Efficiency Operational
Efficiency

• Salamanca Cogeneration • Improvement

Project • Boilers
and increase of
modernization
Pipeline and
• Electricity Federal • Turbogenerators
ship transport
Comission (CFE) modernization
investment for boilers and • Heat
• Revamp of
turbogenerators Exchangers
transportation
• Pemex investment for off- replacement/
by ship and
sites to buy 580 t/h HPS and revamp
roads
83 t/h MPS from CFE • Flue gas heat
• Distribution
recovery
automation
• Madero Cogeneration • zero emissions
and control by
Project in refienries
SCADA
• Expansion of
• New 22 MW Gas pipelines and
Turbogenerator with Heat terminals
recovery
 Content

The Structure of the Refining Industry in Mexico

Economical Issues

Strategies for Modernization and Expansion

Features of the Expansion Projects

Conclusions
…Thank you