Published on Tuesday, December 15 2020
Authors : John Mayes and John Auers

In the last ten years, refining capacity in Latin America has declined by over 230 MBPD in spite of growing demand, which has increased by about 120 MBPD.  Further exacerbating this growing imbalance is a sharp decline in the refinery utilization rates of the existing refineries in the region.  In 2009, Latin American refineries were operating at an average utilization rate of 83% of capacity, but this fell to only 54% in 2019.  This has resulted in Latin America becoming a major importer of petroleum products, with most of those barrels coming from U.S. Gulf Coast refineries.  Countries in the region have long tried to stem this trend of increasing dependence on product imports through the development of new refinery projects, several of which have been announced in recent years.  However, success has been very limited and this has not changed with this new batch of proposed capacity additions.  In most cases, construction has not even begun and in those where ground has been broken, delays and cost overruns have been common.  In fact, in some projects, hundreds of millions and even billions of dollars have been spent with no effective path to completion – bringing to mind the Dire Straits classic, “Money for Nothing.”  In today’s blog, we provide a summary of the current list of planned refining projects in Latin America and an update on their progress and prospects.


While highly criticized and in spite of significant skepticism, the new refinery in Dos Bocas, Tabasco has reportedly made some modest construction progress.  The 340 MBPD facility has completed the Phase I portion of the project which comprises the front-end engineering design (FEED), detail engineering of the project execution plan, a cost estimate and preliminary work for Phase II.  On October 18, President Obrador and the Secretary of Energy Garcia declared the massive construction project to be 24% complete.

While the completion estimate may be exaggerated, it does represent substantive progress none-the-less.  The refinery has already had a troubled past and its future is hardly any brighter.  The pronouncement to build a new refinery was a key component of President Obrador’s campaign strategy in the 2018 election.  Promising that the facility would be completed in 2022 and at a cost of only $8 billion, the plan was widely criticized.  Most independent estimates at the time put the likely cost around $10 billion while the Mexican Petroleum Institute (MPI) forecast a project cost of $14.7 billion in 2019.  The initial tender in 2019 for the plant’s construction was canceled after all of the offers exceeded the government’s cost limitations. Pemex has recently officially acknowledged a modest cost over-run to-date of slightly under $1 billion.

Even as the first actual construction was beginning, the International Monetary Fund (IMF) urged the construction to be put on hold to allow for more funds to be directed at COVID-19 relief efforts.  Complicating the construction process, Kellogg Brown and Root (KBR) exited the project in September, citing expected costs in excess of government estimates.  KBR was to construct the refinery sour water plants, and the gas treatment and sulfur recovery units.

Even as construction continues, the merits of the project remain highly contested.  The existing six Pemex refineries have been run at exceptionally low utilization rates in recent years.  In 2018, the total utilization rate was a dismal 39% of capacity which declined further to 38% in 2019.  A number of factors was cited as to the reason for the low rates, and included earthquakes, storms, and a shortage of light crudes.  The remedy to importing finished products, primarily from the U.S., is clearly driven by a need to raise rates in the existing refineries rather than to construct a new facility.

Despite the recent optimistic proclamations of progress, the completion of the Dos Bocas refinery remains very problematic.  Funding of the project has been subject to yearly approvals and cannot be considered as a given.  The government has approved an emergency payment to Pemex for the 2021 construction plans of $2.1 billion.  If the project completion is ultimately achieved, it will most assuredly be over-budget and not on time.

In addition to the Dos Bocas project, other new refineries have been proposed for Atasta, Campeche and Tula Bicentenario.  No progress has been made on any of these proposals.


The highest likelihood refining project in Latin America is the revamp of the Talara, Peru plant.  The $4.7 billion project will increase the Talara processing capacity from 62 MBPD to 95 MBPD, a very high cost for such a modest expansion.  As of October, construction was 91% complete, in spite of a three-month COVID-19 suspension earlier this year.  The entire project is to be complete in 4Q21 and the startup procedures are scheduled to begin in late November 2021.  The total startup of the 16 units will take four months.  In addition to the crude capacity addition, new vacuum distillation, coking, FCC, reforming and hydrotreating capacities will be added.  The coking addition will allow the refinery to process heavy crude grades for half of the total crude slate.  No other capacity additions are planned in Peru.


Refining construction in Colombia has ground to a halt.  A planned upgrade of the Barrancabermeja plant has stalled as well as the construction of two new refineries in Meta (40 MBPD) and Sebastopol (100 MBPD).  The Meta refinery had secured a crude supply from Ecopetrol in 2015, but the project was deferred for corruption and legal reasons.  While the first stage of the refinery was to be at 40 MBPD, the project developer, Petroleos del Llano, ultimately planned to expand the site to 260 BMPD.  The Sebastopol facility has been tabled due to a lack of financing.


Like Colombia, there are currently no announced refining developments in Brazil.  This comes on the heels of very ambitious plans to significantly expand capacity in previous years.  However, those plans failed rather miserably, with the last two major proposed projects encountering numerous obstacles and a secession of active construction well before completion.  In 2008, construction began on the 165 MBPD Comperj refinery in the state of Rio de Janeiro.  The project was to be completed in 2013, but strikes and licensing and corruption issues delayed the construction and ultimately halted the development in 2015.  In 2019, Petrobras and partner CNPC evaluated the ability to complete and start the refinery, but concluded in December that this was economically unfeasible.  Petrobras continues to study alternate uses for the facility, on which billions have already been spent.

A similar fate befell the expansion plans for the Pernambuco (RNEST) refinery.  The first phase (115 MBPD) of the facility was constructed in 2014 and the second phase (also 115 MBPD) was to be completed in 2019.  Like Comperj, this project was never completed and the RNEST facility is part of the ongoing initiative by Petrobras to sell eight of its refineries. 

Other Latin America

Several other refining projects have been announced in Latin America in recent years but are languishing for a variety of reasons.  Some had little or no financial backing while others were supported mainly for political reasons.  New refineries have been proposed in Ecuador (300 MBPD), Nicaragua (150 MBPD) and the Bahamas (250 MBPD), but none of these has progressed much beyond the conceptual stage.  Upgrades have also been announced for existing facilities in Jamaica and Chile, but these have also run into delays.

The greatest potential for capacity increases, however, is not in the construction of new refineries but in the restart of existing sites.  As covered in recent blogs, restart plans have been developing recently for refineries in Aruba, Curacao, Trinidad and the Virgin Islands which have the capacity to greatly expand the refining base in the region.  These and numerous other topics will be evaluated and discussed in our upcoming editions of the TM&C Crude & Refined Products Outlook (C&RPO) and the Worldwide Refinery Construction Outlook (WRCO), both of which are to be issued in February 2021. For more details about these publications or other TM&C services, please visit our website at  or give us a call at 214.754.0898.

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