By KELIN DILLON

 In turn of events in line with Mexican state-owned oil company Petróleos Mexicanos’ (Pemex) recent financial woes, the Deer Park refinery, operated by Pemex in Texas, reported its first annual loss in 2024, with a net deficit of 860 million pesos. 

This contrasts sharply with its performance in the two years following Pemex’s acquisition, where it consistently posted profits. 

In 2023, the refinery recorded earnings of 11.967 billion pesos, while its inaugural year under Mexican management in 2022 yielded substantial profits of 19.231 billion pesos.

Pemex attributes the recent losses to “the accounting of strategic decisions amortized in the short term,” as detailed in its latest report.

The refinery, which was acquired in 2022, had initially been a source of profitability amidst financial challenges in Pemex’s domestic refining operations. However, the plant has faced a series of operational incidents, particularly an oil spill and a gas leak reported in the latter half of 2023.

 Operational inefficiencies have been highlighted, with Deer Park experiencing 6.5 percent unscheduled shutdowns in 2024 – the highest since 2017. 

This has compounded existing challenges within Pemex, as the company also reported losses in exploration and production, alongside a decline in crude oil exports, particularly to the United States.

Industry experts suggest that the problems at Deer Park reflect broader issues in Pemex’s management of the refining sector. Luis Miguel Labardini, partner at Marcos y Asociados, stated, “At Pemex, refining has never been profitable. The low margins in refining are a global issue, yet Pemex excels in exploration and production. A reevaluation of energy policy is crucial for Pemex to emerge as a viable long-term business.”

Ramsés Pech, an energy sector analyst with Caraiva y Asociados, noted that the refinery’s losses stem largely from rising operating costs associated with positioning its products in the US market, despite only a marginal increase in revenue – up 0.1 percent to 186.381 billion pesos in 2024 compared to the previous year.

Adding to the refinery’s financial challenges, the potential imposition of US tariffs on crude oil imports poses a further threat, with Deer Park importing between 80,000 to 120,000 barrels of Mexican crude oil daily. 

Pech warned, “This will be a difficult operational and financial test for Deer Park in the coming months.”

The downturn in Deer Park’s financial performance contributes to a larger trend impacting Pemex, which reported net losses of 620.605 billion pesos in 2024, predominantly stemming from its refining sector in Mexico – accounting for 94 percent of the total losses. In contrast, the logistics segment managed to post profits of 12.188 billion pesos.

Adrian Duhalt, an energy analyst, stressed the urgency of reforming Pemex’s operations, stating, “Ideally, Pemex should gradually address the significant inefficiencies in key areas like refining, with an emphasis on achieving profitability in the medium term.”