MEXICO – PEMEX approved an investment of US$11.97 billion to improve its environmental performance. With the actions contained in its 2023-2028 Business Plan, NOC seeks to capture 98 percent of its emissions, phase out fuel oil production, and increase electricity production through clean cogeneration technology.

NOC will invest $3.78 billion to increase to 98 percent the natural gas it captures instead of flaring it. PEMEX currently captures 93 percent of emissions from its oil extraction processes. According to Bloomberg, PEMEX reported that it reduced its emissions by 30 percent during 2Q22 earlier this year. The company also increased gas capture by 5 percent compared to 2021. In 2022, PEMEX was budgeted MX$14.53 billion (US$763 million) to capture 96 percent. By 2021, the company had increased its emissions by 30 percent due to lack of proper infrastructure maintenance. Experts believe that instructions to prioritize production may have spurred NOC’s decision to ignore its flaring record.

According to the approved business plan, PEMEX will invest $5.66 billion to stop producing fuel oil. Currently, thirty percent of PEMEX’s refined production is fuel oil, which represents a loss of $5 per barrel. This is a big challenge for NOC: Since 2021, PEMEX had planned to reduce its fuel oil production to 28 percent by 2H22, 27 percent by 2023 and 17 percent by 2024.

NOC will build two coker plants in Tula and Salina Cruz that are expected to start operations in 2024. According to La Jornada, PEMEX produces diesel with 500 PPM of sulfur, but aims to produce ultra-low sulfur diesel with less than 15 PPM of sulfur. This would boost PEMEX’s ability to stay in business in the long term, as most oil companies have already established plans for the decline of the oil industry. According to Moody’s, only companies that can afford to produce in a lower oil price environment will survive in the future. In addition, for electricity cogeneration, the board approved a budget of US$2.54 billion. PEMEX aims to reduce 3 million tons of CO2 emissions annually.

In addition, the creation of a sustainability committee was approved earlier this week, and a Sustainability Plan is expected to be ready in the third half of 2013.