Salamanca Refinery, Mexico

The Ing. Antonio M. Amor Refinery in Salamanca in the State of Guanajuato, Mexico, is owned by Pemex Refinacion (Pemex). Pemex Refinacion, a subsidiary of Petroleos Mexicanos, Mexico's national oil company, is the centre of the project. The contract to provide project management services related to the administration, monitoring and coordination of work needed to reconfigure the plant was awarded to Foster Wheeler Corporation.

SALAMANCA REFINERY PROJECT

The overall reconfiguration projects announced by Pemex involve Salamanca as well as four other refineries in Mexico, and are expected by the company to require an investment in the range of $5-$7 billion over the extended course of three to four years. Work at the five refineries is in the bidding stage. Each will be completed by international consortia. The projects are expected to result in increased production, enhanced product quality and additional product slates for the refineries.

The Salamanca revamp is a joint project and includes the modernisation of Pemex's Tula refinery. Financing was approved in March of 1999 and the investment required for both projects to be undertaken was set in the region of $334.5 million.

PROCESSING UNITS

The reconfiguration at the Salamanca refinery will include the construction and/or installation of new processing units; the expansion and/or reconfiguration of certain units currently in place; the expansion of auxiliary services associated with the refinery and with the storage, handling and supply facilities; and the overall integration into the refinery of the new plants, the modernized plants and the enhanced auxiliary infrastructure. This work will be performed by the selected engineering, procurement and construction (EPC) consortia. Foster Wheeler will use expertise residing in local Mexican companies to supplement its resources. This is commonly regarded as an important benefit in emerging markets, where the transfer of skills is seen as important to general economic development.

Work on the project has begun and is expected to last for 24 months, thus should be completed late in 2001.

THE BIDDING

Six bids were made for the Salamanca refinery, expected to take 24 months. The revamp of the refinery is aimed at cutting Mexico's dependence on imported high-octane gasoline by 10,000 (b/d) and at raising production of diesel and aviation fuel. Among the bidders was South Korea's Samsung, which made the lowest bid.

HYDROCARBONS IN MEXICO

Mexico controls the second largest oil reserves (approximately 40 billion barrels) in the Western Hemisphere, after Venezuela. In the first half of 1997, Mexico was the largest supplier of crude oil to the United States. Mexican oil production in 1997 reached an average of 3.44 million barrels per day (b/d), of which about 3 million b/d was crude oil. Crude oil production has increased by more than five percent over 1997 levels, following a nine percent increase in 1996.

Mexico's oil industry is the major source (about 40%) of government revenue. Pemex is the world's sixth largest oil company and the single most important entity in the Mexican economy. Pemex enjoys a monopoly over exploration and production (E&P) of all hydrocarbons, a position guaranteed by Article 27 of Mexico's Constitution, which reserves ownership of hydrocarbon resources to the state.

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