Mexican energy officials this week insisted the government is going ahead with plans for a new $10 billion oil refinery, despite speculation it could be shelved in favor of cheaper alternatives.

State-owned oil firm Petroleos Mexicanos, or Pemex, Chief Executive Juan Jose Suarez Coppel told legislators at a hearing Thursday that both the new refinery and using excess U.S.-refining capacity are useful for securing adequate fuel supplies.

"We have different elements in our strategy," he said, according to a transcript provided by the company. "One very critical, very important element is the new refinery. Another element is using foreign infrastructure that would be cheaper than building new [additional] refineries."

Suarez was the second high-level energy official to reaffirm Pemex's intention of going ahead with the refinery. Energy Minister Georgina Kessel confirmed the plan earlier in the week, saying it would help to meet growing domestic demand for gasoline, and be the most important industrial-works project in the last 30 years.

The 300,000 barrels-a-day refinery in central Hidalgo state would be the first built in Mexico in more than three decades, adding to the country's six existing refineries. Pemex has a refining joint-venture in Texas with Royal Dutch Shell PLC (RDSA, RDSA.LN, RDSB, RDSB.LN), but in Mexico only the state company is allowed to refine oil.

Pemex imports more than 40% of Mexico's gasoline, and that is expected to rise as the economy grows.

The Hidalgo refinery is still in the planning phase, but its 701 hectares of land have been acquired by the Hidalgo state government and donated to Pemex, Suarez said.

The process of choosing the right technologies for the refinery has begun and invitations have been sent to possible bidders on parts of the project, he said.

Construction contracts will be tendered in the first quarter of 2012 and the operation of the new refinery will begin at the end of 2015, "as was originally foreseen," Suarez told a legislative committee.

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