Initial site preparation has begun for what will be the country's largest refinery at the Manuel Hidalgo complex in Hidalgo state, said executive project coordinator for Pemex Refinación, Arturo Arregui García, in a roundtable at the ExpoForo Pemex.

At full capacity, the new refinery will process 250,000b/d of heavy crude as well as 76,000b/d of crude residuals from the existing Miguel Hidalgo refinery.

The NOC's refining branch has been unable to keep pace with rising gasoline demand in recent years. While gasoline consumption is more than 820,000b/d in Mexico, refineries only produced 433,000b/d in 1H12. The remainder is imported.

Arregui said national gasoline consumption will be 982,000b/d in 2015, so refineries must keep up.

Operational inefficiency has been an ongoing problem at refineries, which have a national processing capacity of 1.6Mb/d of crude oil but only process 1.2Mb/d.

The new refinery's 17 plants will be able to produce 168,000b/d of gasoline and 116,000b/d of diesel, as well as other fuels and oil products. The complex will also churn out 10,000t/d of coke and 1,300t/d of sulfur.

"We're looking to reduce the cost of supplying fuel to the country, and increase operational flexibility for the distribution system that has been overloaded by increasing demand and high imports of gasoline," Arregui said.

Arregui said this is not one project, but rather, two "mega projects" - one for internal infrastructure and a second for external. Around 100 contracts will be handed out to complete the refinery.

Internal infrastructure works have already begun with site preparation and Pemex plans on handing out more contracts soon. Three wastewater canals and one set of high-tension power lines must be rerouted to make space for construction. These contracts are expected by end-2012.

Further contracts for engineering, procurement, and construction will be handed out by mid-2013. External work will be mainly pipeline and pumping station construction. Planned pipelines include a 36", 643km line from Nuevo Teapa-Jalapa-Tula; an 18", 150km line from Tula-ZMVM (Metropolitan Zone of the Mexico Valley); and a 24" line from Nuevo Teapa-Poza Rica-Tula.

Total investment in the refinery and related infrastructure will be US$11.6bn.

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(Originally published August 3, 2012, by Business News Americas.)