Pemex HSFO unlikely Russia-US Gulf replacement

Pemex HSFO unlikely Russia-US Gulf replacement

Mexico City, 12 April (Argus) — Mexican state-owned Pemex's overabundance of high sulphur fuel oil (HSFO) may not prove a good replacement for banned Russian fuel oil at US Gulf coast refineries, because of both cost and quality issues.

Russian Urals-derived M100 fuel oil regularly makes its way to US refiners as a coker feedstock. In February as much as 53pc of US Gulf coast fuel oil imports came from Russia, according to Vortexa, versus about 24pc from Mexico. In March Russian fuel oil imports rose to 71pc while Mexican imports shrank to only 5pc.

But with the US banning all Russian products and crude imports US refiners must look elsewhere to fill that need.

Pemex has a surplus of fuel oil, with its six domestic refineries producing more of it than any other product, even gasoline, in 2021, at 244,300 b/d. That is up by 39pc from 2020.

But despite this large supply relatively close at hand, more than 50pc of anticipated US Gulf April cargoes are expected to arrive from the Middle East, including countries such as Kuwait, Oman, Saudi Arabia and Iraq, according to Vortexa. Only 6pc, or 13,620 b/d, of April US Gulf coast imports will originate from Mexico, with