Mexico - The development program (Vol. 2 of 7) : Annex 1 : petroleum and petrochemicals

I T" I II I "A Mr - If L i m I i , RESTRIC TED WITHIN ". .11 I .A... . -, wra a VVlld/ ONE WEEK I is reupull wUs prepureu 1o use wi4lign Iou lt unu uan uan'4sinfut u u rganizations. They do not accept responsibility for its accuracy or completeness. The report may nor be publnsneu nor may It be quoteu us representny ticr ews. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION AN APPRAISAL OF THE DEVELOPMENT PROGRAM VOLUME II ANNEX I - PETROLEUM AND PETROCHEMICALS Department of Operations western remiupnere CURRENCY EQUIVALENTS U.S. $1 = 12.49 pesos 1 neso (Mex) = U.s. 1. $08 1 million pesos = U.S. $80, 000 ANNEX 1 PETROLEUM AND PETROCHEMICALS Page Foreword 1 Recommended investment Program 2 Petroleum- investments 6 Production Facilities 6 Refining 12 Transportation 17 Petrochemical Investments 19 Detergents 21 Aromatics 22 Southern (Pajaritos) Chemical Complex 2b Chemicals from Salt 26 Plastics Complex 27 Synthetic Rubber Complex 28 Postacript 45 Attachment 1 LIST OF PFTROCHEMICAL PROJECTS AN1X 1 PETROILEUM AND PETROCEMICALS LTST OF TABTES 1 Pemex: Geological and Geophysical Studies, 19148, 1950, 1952, 2 Pem-- - I- ex - Q+.eore"~~ c,"'n-.P T- L4 XKL kLIL~A. ..JIJ kj- kU.J .PJI L%JLJ Li! LLLI*JL i.J J.L 1952-1962 5 Pemex: Theoretical Duration of Natural Gas Reserves, 1952-1962 6 Peme:: Production of Crude Petroleum and Natural Gas Liquids, I remex: Average Production of. Crude Petroleum per Wal, 1938, 1948, 1952-1962 8 Pemex: Crude Petroleum Production by Major Zone, 1938, 1948, c9-2-1-62 9 Pemex: Production of Natural Gas, 1938, 1948, 1952-1962 lu Femex: Crude Runs to Stills and Refined Products Obtained, 1938, 1948, 1952-1962 11 Mexico: Domestic Consumption of Refined Products 12 Pemex: Exports and Imports of Petroleum and Natural Gas, 1938, 1948, 1951-1962 13 Pemex: Pipelines, 1954-1962 14 Pemex: Volume Transported by Product Pipelines, 19'8-1962 15 Pemex: Exports of Crude Petroleum Residual Fuel Oil and Other Products, 1956-1962; Estimates - 1963-1965 16 Pemex: Income Statement, 1956-1962 17 Pemex: Total Drilling Expenditures, 1956-1962; Estimates - 1963-1965 18 Retail Prices of Gasoline, 1962 19 Mexico: Consumption of Anti-Knock Compounds 1953-1962 - 2 - -2AL 20 Mexico: Apparent osmtino autcSd 21 Mxico: Apparent Consumption of Anhydrous Ammonia 22 Mexico: Ixnports of' Srnthetic and Natural Rbbers 2 ' Pew,mx:~ Marvor n oect - +~ Sumar Investent Program - Proposed vs. Recomended 25 Pemex: 'ajor Projects - Proposed vs. Reco"mended Investment I.rograms, 1963-96 26 Recomiended Program in Najor Projects: N-w Projects and Projects Under Construction by Year 27 Reco.mmended Program in Major Projects: New Projects and Projeets Under Construction by Type of Iacility, 1963-65 28 Pemex: Recommended Investment Program Adnor Projects, 1963-65 29 Pemex: Recommended Investaent Program Equip,ment, Apparatus and iaterials, 1963-65 30 Pemex: Summary Investment Programs 31 Pemex: Cash Surplus Available for Investment, 1958-1965 32 Pemex: Investment, 1953-62 33 Pemex: Sunmary Balance Sheet, 1958-1962 34 Pemex: Statement of Financial Position, 1956-62 35 Ethylene Derivatives 36 Some Aromatic Petrochemicals ANN E Y I P7PnTPATTM ATM PRTPCn(!P.MT.ATq FOREWORD In January 1964 consultations were held by the Bank mission with Annex and receive any comments or additional information Pemex might wsh to make. Although remex was generally in agreemntu with the eval- uation made by the Bank mission, the new information supplied with respect to o'Duges ne inveuiint progrw ano Ul ULciUuLL 1t- taken on certain matters, particularly the refineries program, require modification of this Annex in a number of important aspects. Becaust there has been insufficient time to rewrite the whole Annex, a few essential corrections of data have been made, and the postscript at the end of this Annex has been prepared and is to be read in conjunction with the section on Pemex in Chapter 7 of the main report. - 1 - AN NEX 1 PETROLEUM AND PETROCHEMICALS The program of investments for Petroleos Mexicanos (Pemex) is related to the needs of an integrated petroleum operation covering production, transportation, storage facilities, refineries, and petrochemicals. The investment program is the largest single category in the 1963-65 public sector program. The recommended program averages 2.3 billion pesos annually, equivalent to 18 percent of the average annual recommended investments for the entire public sector. The mission believes that most of the projects proposed by Pemex are sound in terms of their financial return and are consistent with the needs of the Mexican economy. The mission therefore recommends that most of the program go ahead as scheduled. The over-all strategy of the pro- gram is in keeping with the excellent record of Pemex. Throughout most of its 25 years of existence Pemex has generally kept pace with the grow- ing energy requirements of the Mexican ecomomy. Its production of petro- leum and natural gas today satisfies over 92 percent of Mexicots energy needs. That Pemex is in a sound basic position onerationally is borne out by the present level of production, the size of proved reserves of licuid hydrocarbons and natural gas, and by the primary and cracking capacity of its refineries. For the first time, in fact, spare capacity is beginning to appear at points within the system. Since its early days the develorment of Pemex has gone through a number of phases. The first phase was characterized principally by the efforts to maintain operations and at the same time to consolidate the competing systems of the expropriated companies. The second phase saw the start of a refinery construction nrogram aimed at renlacing the old export refineries with modern installations. New capacity was added to meet risin' domestic consumption. An exploration program was formulated and put into effect during this period. This was followed by an emphasis on balancing the elements of the svsten During the nast 10 veArs- over two billion pesos have been invested in refineries and 1.6 billion pesos in trqn.qnnrt.;tinn_ Tn thp nQ-9period, nii+.Ivq fnrw rAfinincr and trn- portation accounted for over 40 percent of total capital expenditures. Tnves_trent. in productrion fAiiA- q nf +11A +n+'nI figure that is not out of line with the average integrated oil company to production. During this period were completed the 1adero and Ninatitlan refineries and modernization of exi--ing reinris th- R-e.Y,oS,-- CP1--h ll and Cd. Pemex-Mexico gas pipelines; the Tampico-Monterrey-Torreon products plants at Reynosa, Cd. Pemex and La Venta; and the construction of the camp 4 , 3 D%t A -JL5.A - 2 - Now with the completion or near completion of these major works, a natural tapering off in the level of investment in these facilities can be expected. However, substantial investments will continue to be needed to maintain and improve operations in Pemex's traditional lines of endeavor. At the same time, a new field of activity has been opening up to Pemex. The fourth or petrochemical phase of development has comImenced. Recommended Investment Propram The mission's recommended program is lower than that proposed by Pemex in the amount of 312 million pesos per year. It averages 2,014 mil- lion pesos over the period 1963-65 which represents a decrease of 13.5 per- cent with respect to the Pemex program and of 2.6 percent as compared to disbursements during 1960-63. However, the program calls for higher dis-- bursements in 1963 as compared with 1962. In drawing up its recommended program, the mission took into con- sideration timing, readiness, expansion of operations, improvement to Droducts. cost. vield in investment. displacement of imnorts and the over- coming or prevention of bottlenecks within the Pemex system. The mission would emphasize. however, that its recommendations reflect oreliminary judgments of the individual projects. Most of these judgments are subject to confirmation bv final nrnint Pnnrqi.anl qturim.q _inrp the mission wras not able to check cost estimates and demand projections where these were m-ne availahl or n onmnlete and undn+.A them where ruired However, the mission believes that Pemex has been wise to place emphasis on upgrad- inr pyint.inv nrian A t nr +.hi t mn t-r+in-,= n-r naw n adnef. il1 m:iln- taining the momentum of its exploratory activities. The mission recommen- sectors: investment in refineries and, to a lesser extent, in petrochemicals. For administrative purposes, Pemex does not classify its investment category Major Project is self-explanatory and includes investment in all phse Po the sysem nr Prolects ar nv-=tew A ~ +r +h= t1e'~O of oil and gas and are composed chiefly of field installations such as flo.elines, gathering ta on+4s en vrrouan, +e nC anewn+n Wannm Apparatus and Materials is related to field installations and includes such drl.n ri S 'LIO %. ''C ~6~U AMtf " 0 Q, ULWLLAL.Q, CUA LA AJ..LC0. UUO V.J. VC"..L%%AQL~ sorts. There appears to be some inconsistency in the treatment of drilling LA. "- .Ut U11V PJ.L-V&LCLUL I-U'P.L-qX U.. WA .IV Q%;L;.L'U.LdL %AV LC IJ. _es.%U~L...1C% Pemex does not include drilling on its own account as an investment but does show contractdrlig Foinenlproe,icoidrdilngaa part of operations, separate and distinct from the investment program. The mison treauS all completions except dry holes as capital unargeonin- cludes them as part of the investment program. Based on the factors which will be fully discussed at appropriate places in the text, the following investment program for the petroleum sector is recommended: - 3 - INVESTMENT PROGRAM RECO2ENDED BY THE MISSION, 1963-65 (millions Mex$) Equipment Distri- Facilitv/Sector Maior Minor and Drilline Total bution Projects Projects Material % Production 69.5 330.0 560.1 2,569.0 3,528.6 58.4 Plants and Othes 69o 3300 560.n1 - 9090 15.9 Perce^-n4 37".4 7.8 12.3 A210. ~I. 1 2 A7A).).1. '7 7 1. 17 o7 0 a p2x i7 Mex$ 2 00a V -0. J. Io WO I W/A W I%9- T mo r pI pro in- ITe I ro LI -11L L..7 W ~ I - L U.L7 W __/_W ^. OTAL 2,27. L17.9 1.5. 2,I9. f-t~. 3 vestmentr of 2.6bllo et aeae of 26 peren whnen cmardt Distribution Percent 37.4 7.8 12.3 42.5 100.0 a/ ission estimates thiat charges to operations kfor dry noles) w.ll. amount to approximately Mex$ 2.57 billion pesos. The major works program recommended -by the mission projects an inM- vestment of 2.26 billion pesos, a decrease of 26 percent when compared to the program in the same category as proposed by Pemex. Petrochemicals take a major slice of the investment budget while the traditional projects related to oil and gas are lower than in previous years. The main differ- ences between the proposed program and the recommended program are summar.- ized in the accompanying tables to this section. As a general remark, the mission would point out that, during the last few years at least,yearly/actual expenditures for the investment program, especially for new projects, have been below levels projected by Pemex. Projections must be adjusted to more practical levels to avoid leaving incomplete projects which were scheduled for completion. Also in the past, profitability was one among several criteria for project selection. The mission believes that profitability as a test of efficiency should be given greater weight in choosing future investment projects. The mission's reaction to the petrochemical program, which is favor- able in general, is premised on the development of a financial plan that - 4 - will not compromise the petroleu% rcgran proceeding on schedule. Though petrocheic,ls rill increase the varietys and value of PeMex procIucts. and shod eventually raise the average net return on PeråcxIs total assets, thP future nf the P orgnnzt7.ion will till depend basicaly on its integratbed petroleun operation. Otherwie, the mission's judgtent on petrochemicals is related to the readinessVof someofthe major p c al i t . c had a great deal of experience in the construction and operation of heavy proness eqipmntbuIDt it appeaårs improbble th,at all of the invetnen program inr new projects can be executed sinultaneously. The time factor isanoverridingconsideration. Projects;here the processe dsign has not been conpl,ted, or the order placed, cannot generally be co:pleted in undler 241 mornth"s. (Oth,ers wic a :-,r advnce may~~~ have- to0 be 1'od- fied to increase their capaciLy. The maission feels that as a general ru11e, beflore any project aoes _ ied, a fin1' ar praial shouLI - iade. uch time has elapsed since some of the preliminary studi-s were under- taken. Cost and price conditions have chabged and so has th miarket. The recorne-ations for petrochemical investments have been made with this reservation. On a comparative basis the lprgest cut in the -emex program has ber ri~Jk- in P]cV rý r L, - fLects the thinking of the mission concer'.ni the c.ns-riction of the two West Coast refineries in the period 1963-65. In refinery investm,ent as in other process industries, there is a natural lumpiness in investmlent. Mexico has recently gone through a period of very high refinery invest- ment, which will fall off as a result of siJze of the units. The mission believes that heavy refinery expenditures ;7ill again be needed in the late 1960's. Transportation investment has also gone through a period of rapid expansion. However, as pointed out in the later d2iscussion, present ex- nenditures will adequately cover the increase in demiand and leave spare capacity in some of the rain trunklines. Investment beyond 1965 T-,ill be for new pip,lines to centers ifhere consumDtion is growirg or las grown sufficiently to justify the lines vis-a-vis other methods of transporta- tion. For example, by 1966 Guadalajara will be consuinig over 8,500 bar- rels per day of light products not including liquified petroleum gases. The rule of thumb used by Pemex for product lines is an average load of 7,000 barrels to 10,000 barrels per day. Lxcept for one pipeline, the mission agrees with Pemex's program. The sales program involves mainly the construction of bulk storage plants. The mission feels that sales investment figures proposed by Pemex were too high. The )rjgran which has been reconmmended includes all bulk plants where substantial amounts have already been invested and some new plants at large centers of consumption or of distribution. Those plants proposed where no justification has been given by Pemex and where the mission had no means of verifying local conditions have not been included in the mission program. The relatively heavy investment in drilling represents a 12 per- cent increase in the 1963-65 period as compared to the last three years (1960-1962). The number of barrels discovered per well has dropped and the number of wells needed just to maintain production and offset the natural decline of existing reserves has increased. Partially off-setting the above is the strong performance by natural gas where reserves have in- creased relative to production. The only modification of substance recom- mended by the mission involves the postponement in the purchase of equip- ment, principally drilling rigs, as the mission believes there are sufficient rigs in Mexico for the expanded drilling program. The whole question of purchases of equipment and materials touches on inventory and equipment pol- icy. However, the mission did not have time to deal with this important question. INVESTMENT PROGRAM BY FACILITY, 1963-65 (in millions of pesos) Proposed by Pecommended by Difference Pemex Mission Absolute % Production 3,620 3,529 -91 -2.5 Wells 2,569 2,569 0 0 Plants ) Cther ) 1,051 960 -91 -8.7 Transportation 592 557 -35 -6.0 Refineries 1,085 445 -640 -59.0 Sales 281 246 -35 -12.5 Other 71 8 -3 -L.5 Sub-total 5,650 4,845 805 -14.3 Petrochemicals 1.328 1.198 130 -9.8 Total 6,978 6,043 935 -13.4 The differences between the major segments of the program are in- dicated briefly in the following table: CUAFATIVE SUTIDAI F U MAKF tECTU U THE PRUCGRAQ, 1963-65 (in millions of Nex$) Proposed by Pemex Recommended by nssion Yearly Yearly Total Average Total Average Major Projects 3,047 1,015 2,258 753 Eonipment and Annaratus 890 297 7.4 2I Minor Projects 471 12 471 157 Suh-t.otal 4,408 1,469 ,474 1,158 Drilling 2,569 856 2,569 _8 Total 6,977 2,325 6,043 2,014 - 6 - SUMMARY OF DISBURSE.ENTS a/ (in millions of Jex4) Actual Disbursements Proposed Recomenjed 1960 2,439 - 1961 2,130 1962 1,634 - - 1963 2,706 1.756 196- 2,164 2,118 1965 - 2.108 2.169 Total 6,203 6,973 6,03 Average Yrly 2)068 2,325 9j1h a/ Figures have been adjusted to include total drilliLg charged as a capital cost (e~xcludes dr holes) an therfoe all th f~oigres are an a comparable basis. For more detail see appendix tables. Petroleum Inv.stments Production Facilities. As a general content, the mission found that the projuction facilities, present anj planned, are well geared to the producing needs of Pemex and represented an economical and efficient use of Nexi cols~ energy resources. Te production of crue petrleum and natural gas liqui3s in te past 10 years has increased by 64 percent from 203,007 barrels daily to 333,0u ou1s./Oay. The total includes 26,667 barrels daily of naLural gas liqnids in 1962 obtained from the absorption plants. In 1962, Pemex was producing crude petroleum at 95 percent capacity. The emphasis in production has shifted toward southeast Mexico where the Tobasco field now produces over 26 percent of total output (Table 8 ). Production has also become more costly. Average production per well in Nexico has dropned by 50 percent to 85 barrels in the period 1952-1961. This compares with about 15 barrels in the U.S., 300 barrels in Venezuela and 6,700 barrcls in Saudi Arabia. - 7 - In 1962, natural gas production increased to 371.2 billion cubic feet, equivalent in terms of heat content to approximately 200,000 barrels daily, of which 30 percent was sold on t-e doestic market; the remainder was exported, used in oper.ations, reinjected into the formations and flared. As the capacity of the two major gaslines expands, production will continue rising. Larger expenditures than in the recent past will bc needed to ensl3re an adequate reserve of crude petroleun. Heserves have not in- creased significantly during the past four years. This may or may not indicate a trend. However, a sustained exploratory effort in the years to come must be maintained and not be subordinated to other programs. In 1958, lack of funds forced Pemex to forego some exploratory drilling which resulted in a decrease of 30 percent in the number of completions compared to the previous year. Fortunately the management of Pemex is very much aware that exploration is essential for future growth. For the five-year period, 1962-1961, the mission has estimated that, on the premise of 5 percent and 10 nercent per annu:m growth rates for petroleum and natural gas respectively, Pemex will need to discover some 1.5 billion barrels of hydrocarbons reserves to maintain the minimum reserve ratio of 20 to 1. It costs Pe.uex 2.50 pesor to explore for and discover each barrel of oil.T On this basis. 3.7 billion pesos would have to be spent during the period. The program of exploratory expend- itures discussed with the mission covers tLis situation adeouataly. However, if a balance is struck bet-Teen the minimum and present reserve ratios.2/ some q_4 billion nPesos wo-ld be renired for thp -xnloratory effort during the next five years. Exploratory expenditures are sched- iilpcid t.o ri.qp Ivr nhont. 10. C nprnpnt. f.n 11 -C nPrront. nPr yTP-nr- Tlii! should be considered a minimum program. Exploratory activities comprise geological and geophysical bearing structures and indicate dri'lling locations but it is only by drilling that oil can be found. The mainJ- exp-tloratory --ti-I+ty has been concentrated alon- the coastal zone of eastern Mexico in an area of 180,000 square kilometers. and the tendency is to place more emphasis on the seismograph for detailed s4-uAU.f L v I LV.LtiC:LO. 111fZ 1-0ULU0v V.L AULU1AUU iiWU LVUHAVC UC"ll DGUU_L0 factory in general terms and sufficient well locations for exploratory u±4r'I9u [ihave been "vunu. 1/ Antonio Garcia Rojas "La Exploracion Petrolera en Mexicoll, 2/ Petroleum, 20 to 1 and rjatural Uas, 27 to 1. The Pemex program does not call for any sharp increase in geological and geophysical studies but the shift toward seismographic activities in itself indicates an increase in exploratory expenditures as the seismograph costs about twice as much to operate as the magnetom- eter. The definition of an exploratory well can vary according to custom. An exploratory well is here defined as a new field wildcat. Following an increase in exploratory studies in the early 1950's, the number of new field wildcats rose from 29 wells in 1952 to a peak of 94 wells in 1961 and then dropped to 76 wells in 1962. At the same time the depth of these exploratory wells has increased from an average of 5,000 feet to 7,600 feet per well. Since 1938 the average success ratio in new field wildcats has been around 1.7 percent. However, the success ratio shows a downward trerid. In 1958-1962 only 12 percent of the wildcats were successful. Statistically this indicates that the best areas have been drilled. Acc- ording to Pemex, it is probable that the principal oil-bearing structures have been discovered. This does not mean that there iq no more oil to he discovered but that it will be more difficult to find in the future. Off.- shnrR nronnent on th ('Onlf of Nvino annpear nrn-micing I-n nycse the lesso-n ton be,. learnt+ f"rm thIis, iz that, barringr the discovery of a second Faja de Oro, an increasing number of exploratory IJA q wVill hiz rinrI4,rI +.n mn_nin+.i_-P; ' Mel+t. nrl-ir i'z +11,:A success ratio becoming lower, and wells becoming deeper, but the number of 1arelsnis-covoerdp nowe rll hasrop ped. T+ is calcIated that ound two million barrels are discovered per exploratory well versus the 3.6 M4,14-nn f'j.VT_ go Th-en +oad riin cot is partJO-ly offset by improvements in technology of drilling and exploration. ,TM.T "r T% 7T 'M A UIJI I n_In_ I_n4_I 1962 1961 1960 1959 1968 lota-L , t.Lj_s (U 74 E rl'oduers 7U ->11a Dry o67 8 72 71 5 Percent Success 11.8 0 8. 17.3 13.4 7.8 J the , deUcade L7>2 L7 UC> J 9 573-1 9L62L,-1 U3il baJrel V.L .L- adP ga equivalent and 130 neli fields were discovered. Jr-.de oil discoveries represent 33 percert of the totAal di-:scoL.-verled inMo UUe. nUIJ- sidering a reserves-production ratio of 20 to 1 as normal, presenu rates of oroduction idicate there arm sufficient reserves for 20 years. The U.S. has a reserves ratio of only 12 and Venezuela of 16. qowever, while the R/P ratio appears to 'c satisfactory, driling has only added back to oroved resources the volume extracted during the past three years. The theoretical life of proved reserves shows the following ch-nges: Cru,e n.nd Naturr,l Crude Petroleum Gac L2a,,.cis Natural as Reserves Reserves Riserves bil. bbls. R/P bill. hblE. R/P 1012 cu.ft,, R/P 1959 2.16 25.3 2.72 25.7 7.79 23.6 1960 2.46 2h.8 2.76 25.3 9.12 23.9 1961 2.46 22.9 2.76 23.6 10.12 28.2 1962 ?.h9 20.8 2.78 22.8 11.13 30.0 Oi the o ther hand, natural gan reserves a ve shown a distinct u- ,rd trend and the reserves productior r,et to nas ?r:ovec from 23 to 30 in th6 _ame period. Total drilling exprjditures are estimated by the mission to reach 5.14 billion pes_Žs divideJ between contruct drilling (1.92 billion pesos) and drilling on Pe:nexts own accjnnt (3.62 b'I.Iion pesoå). Contract drilling, iihich accounts for about one-third of all drillin- activities, is given by Permex in ther onerational program. Drilling on owr accournb is the resuling residual amunt. The miscion believes tab drill'ng expenditur.-s charged t, onerations (drv holes) will ancant fo 2.57 billion nesos in the bhree-year period :nder cocieration. fhe estinates are based on nast performaice, on an aar on öf the exploraLers ero:ran and on the estimated production of erude petroleum and natural gas. The average production -er well uas taken into consideration togetner ,ith annual decline of about 10 pmrcnrt in producingj w,31s.2/ 1/ The fig,ures on the ruebr of wells to be orilled based on the above are: Exploration Develonment Total 1963 9 570 665 1964 100 630 730 1965 108 696 870 - 10- Among the major purchases included in the Equipment, Apparatus and Materials section of the investment program are six drilling rigs and equip- ment for workovers. The mission believes that the item on new rigs should be readjusted and the purchase of some of the proposed rigs postponed until after 1965, with due allowance for replacement needs. The mission was informed by the private contractors that they have spare rigs on their hands. Pemex at present operates 88 drilling rigs, 45 of which are set aside for exploratory drilling. It is not known how many rigs are operated by private contractors but it is believed to be in the region of 50 to 60. 1/ It is reasonable to estimate that 148 rigs are available in Mexico, 98 fFr development drilling and 50 for exploratory drilling. The 98 rigs could complete approximately 780 wells in a period of 12 months, or more than 37 percent above those contemplated this year. With a greatly accelerated drilling program, new rigs would become necessary from 1965; no doubt some of these could be purchased from private contractors. On the other hand, the mission believes that priority should be aiven to the workover equipment for cleaning and repairing wells shut-in but capable of future production. At present over [,000 wells are shut-in and awaitine repairs. The mission did not review in detail the nurchases of equipment and apparatus other than those connected with the production phase of the industry. However. consideriny that the nrogram is more than double nast levels, the mission assumes that a program some 15 percent to 20 percent hAlow that nronoRed hv Ppmer might b more fPasihle and in annordn with the equipment needs of the company. INVESTMENT IN EQUIPMENT, APPARATUS AND MATERIALS Proposed by Recommended by 4-L,- , - - Mf%M A T Qnnr r% L 1L/ ri.vateU contractors dril about 50 percent of the deve-lopment wells and in 1961 they drilled over 430 such wells. In Mexico one rig can drill an average o eight development wells per annum or one every forty days. On this basis the private contractors used Sh rigs. Ine principal proauction facilities unaer evaluaion are aosorption plants which separate liquified petroleum gases (LPG) and natural gasoline from natural gas. They represent a more efficient use of resources. The recent construction of new plants and modifications of existing installa- tions has meant that for the first time in many years, Mexico can economically cover its requirements of liquified petroleum gases (butane and propane). Two absorption plants are included in the program, one recently completed and already undergoing expansion and the other yet to be con- structed. The former, known as the La fenta program, represents a number of related works. Operating at capacity, it produces 80 million cubic feet per day of dry gas and 8,840 barrels daily of liquids. When operat- ing at the proposed expanded capacity, it will produce 120 million cubic feet per day of dry gas and 13,300 barrels daily of liquified petroleum gases and will result in a substantial increase in output of these liquids. The related modifications at the Cd. Pemex absorption plant are also completed, while the increase in fractionating capacity at Minatitlan is also nearing completion. Of the total investment cost of 352 million pesos only 10 percent remains to be completed. A new absorption is to be erected at Comalcalco at a cost of 29 million esos. It will be the fourth in the Pemex system. It will recover 720 barrels daily of LPG from the wet gas treated and the dry gas obtained (9.h MMCF) will got to Mexico and Salamanca. Without this plant, the gas discovered in the area cannot be processed and utilized. The mission is of the oninion that the nroiect is necessary to suoolement gas suDnlies in Mexico and Salamanca. The value of production will be 50,987 pesos daily when nopating at rannanit.v Tn view of Pomrtys enpripnce in the manage- ment of absorption plants and of the existing market outlets, construction iR reommende for 19A) and n 1904 The minnr projects inludin +hoii4 Pemay nrnoram are clsely +ie to production facilities. Altogether, they account for only 471 million the opportunity or time to study this part of the program in detail, but i+. i eo.f thi anirwinn +.hin+- i anffie-ion+ -a++oYi+invn hnc rei- o vmn +.t minn" projects in the past. The present level of disbursements is somewhat Pemex. MINOR PROJECTS, 1963-1965 TUTli onsU. 04( A-41 4-1dJ AUIL± --rLage ri,uuct±ion Instala-UIES -".vLU Other 1WO.9 YW TOTLAL b0.9 157 - 12 - Refining. ith exceotions to he noted, the refinery program of Pemex i* directed toward increasing the availability of sonie .products and upgrading others, in keeping with the demand pattern of the economy. Recent changes in refinery capacities reflects an added capability to produce the products in demnd utilizing a minimam of crade oil. The denand for refined oroducts in Mexico has almost doubled in the past 10 years. At the sa.ae time the structure of the market has undergone chances; a shift toward consumotion of the lighter praducts N,:soline and the middle distillates) has takei. place. There has been a substitution of fIl oil hv nntural as to tht pyt,pnt thnt fuPl oil qalp' hnive onlir riser by 1.2 percent. All these chanes reflect the develooment of road, rAj I nr ai-r transponrtatir hpr Ittirir, il;tc -i mAmi~fintin-inc industries in general. DISTRIBUTION OF THL DMPA1D 1R LIUID HYDROCA.BGNS 1951 1961 Kerosene 0.3 10.5 Diesel 7.o 12.4 L...2.2 6.8 Fuel Oil b9.2 32.2 Other 8.3 10.1 In keepinL with tne increase in consumption, the priiary capacity of thre refineries in !exico reached 3o8,500 bbls./day at the end of 1962, which was an increase of 80,000 bbls./day over the 1958 capacity. It is expected to climb to 424,000 bbls./day by December 1.9b3 if the construc- tion programs are completed or schedule. !hit is equ,lly important, cracking capacity has doubled in the last five years to 89,100 bbls./day. In the 10 vear period 1953-1962, cru e runs to stills rose by 95 percent. The utilization of installed capacity in 1962 was approxi- mately 88 percent. Together with the increase in crude runs there has been a significant shift away from refinery yields of heavy products to * See remarks in foreword. - 13 - gasoline and the lighter products. In the above, the refinery yield of gasoline has shifted from 22.5 percent to 27.8 percent of total volume processed, and diesel oil has gone from 7.5 percent to 13.2 percent. This is in line with the fact that the rate of gro:rth of the light pro- ducts has moved up more rapidly than for fuel oil. Increasing use of natural was has contributed toward stabilining the demand for heavy fuel oil used in industrial installations. REFIVING CAPACITY (400 bbls./day) Primary Cracking 1958 286 44 1963 424 95 mission did not have access to the official company estimate of future domestic demand for oil and natural gas. The Bank of Mexico has esti- mated an average rate of growth for refined products of 5.8 percent to 196 which is identical to the rate for the last 10 years. However, the mission believes that future requirements of liquid hydrocarbons will be at the lower rate of 4.7 percent and slightly higher if natural gas is included in the total picture. The projection is based on a general ap- preciation of the market, on past performance and on a brief review of the prospects for each major product. PROJECTI&Y OF DOMESTIC CONSUAPTION OF REFIIED PRODUCTS AND i1NATUIRAL GAS ('000 bbls./day) 1961 1966 1961-1966 (1) L.P.G. 20.9 33.7 10.0 Kerosene 32.1 39.1 4.0 Gas5 OJil - Dise 37. 8. Lubricants 3.4 4.3 5.0 Fuel Oil o. su .) 1.4 Others 23.8 40.1 11.0 Total Refined Prolucts 3u>.7 3o4.u h.t Natural Gas 33.6 133.3 9.9 TOTAL 38Q.3 017.8 5.9 - 14 - The eTtimate for -asolina reflects toe fact th:.t the exoansion of th man ,,rket 1-Ms ben sv lorvin'v-' d1cw., Jn th+ , , c.+ f'i - -- cu' ca -_M -nu i, to do so :n the ncxt five ye-rs. ihis is not unreasonable consiaering the idly increasing number of diosel-operated trucks and buses and an increase also tends tn lower consumption per vehic2g mile. The demand for liquified petroleum gases (butane and propane) will IO L u tie UV0 ;,EVoW UUi [LL1 1 UUU bJ: Ui,', ±e1 It _LeUL Wit: dIZ LLHU±Ui uliau~ households in the ,ajo_r cities uill continuo to substitute LPG for kerosene for cooking and neaLin, .-urouseL;. The railroais are th largest single consuac. s of ILese ell .in i1exico with 15 percent of tne iarket. S1sewhere in the reoort, tle miission recommends tne cont.nuation of the 6i9se±izzLion pro;ram on tie F. C. Nacionales de 'Iexico. This would :nvolve some 200 additicnal locomotives, or 25 percent of tie total stock, by the end of 1965. Diesel fuels will also play a greater role in road transportation. Turthermore, dirsel is consumed by a great variety of industries including food processing, beer, paper, soap, chemical and construction. Deending on location, some of these industries may switch to gas as it becomes available. Taking all the above factors into consideration, a high rate of growth in diesel consumption probably ill continue in t-e next five years. Fuel oil can be ex0ected to srou only slowly as a result of th e competition with gas for heavy ndustrial purposes. In Lhe areas where natural gas is available, all new facilities may be expected to prefer it to fuel oil. The Comision Federal de Electricidad esti.atas that it will need 25 percent iore gas ner year. The present rate of growth of natural gas is assumed by the missicn to continue. The mission believes that exports of refined :roducts will increase slowly, pelhaps reaching .,.44 milli.-n by 1965, because the principal rrzr- ket--the '!.S.A.--is protected b./ restrictions. A problem is that exports consist of low value products such as Panuco crides, residual fuel oil, and natural j_as, while imnorts have been made up of gasolines, lubricating oils and greases, all of which have a higI unit price in relation to the Troducts eroorted. Despite a qreater volume cf exoorts. in value terms, there was a deficit between 1952 a..d 1960; since 1961, however, the value 1/ i4exican authorities and t":e lank nave estimated that tho past decades' average rate of incr:ase of 9 percent per anl-um will decline slowly to o oercent oer annum bT 1"70. The total vehicle oocuiation is composed of 860,000 units distributed as follows: cars (58.7%); trucks (33.W%) and buses ('2%). The number of diesel-onerated trucks is ao- proximately 6,00u and these have been growing by 30 percent per annum. - 15 - of exports of petroleum and natural gas has exceeded the value of imports. O_, _ 1 0 I1 2 - - - - -_ -- l nr 1. -.:-1 UnLy LJ*U mallion birrels were imporUeo in .1L a6 comTparEU d-LU11 CUL il- lion five years previously. It is to be expected that Pemex will make further inroads int the list of imported products as its program pro- gresses. The construction of refining facilities under the program, aside from the controversial refineries at Mazatiand and Rosarito, includes the projects below: Primary Distillation. The two primary units under construction at the DLinatitlan (50,000 bbis./day) and Salamanca (40,000 bbls./day) will increase the capacity of the two refineries by 90,000 barrels daily and improve their efficiency by allowing for shutdowns of the existing units. Catalytic Cracking. When the units are completed at the Minatitlan (21,0007Ts_.day) aWT lamanca (20,000 bbls./day), cracking capacity will have been increased by 41,000 barrels daily. It will Serve to up- grade products, to supply high octane gasoline locally and to extend the zones of influence of the refineries in question. Vacuum Distillation. A 25,000 barrels daily unit is under con- struction at Salamarica. Alkylation and Segregation. In March 1963, the mission visited Madero and found that construction of those columns (2,800 bbls./day) was practically at a standstill. The alkylation unit will also s erve to up- grade products and produce 3,900 bbls./day of aviation gasoline. Asphalt. The asphalt facilities planned for Madero will produce 6.300 bb1s.7day of penetration asohalt and 2.100 bbls.1/d of industrial lubri- cants. The domestic market for asphalt is 6,000 bbls./day and demand is growino at 7 nernent nPr vear. Houever. since existinp nroduction. some of it obsolescent, covrrs present demand, the proposed plant would have to rely in part on an exoort market if it is to operate at capacity initially. There are plans to dismantle the old plant, now considered dangerous. It is the mission's view that first priority should be given to the nrimary units- fnllnwAd hv thp nfnlytiir nrnnkina fnnilifip-q anne wifh A relatively low priority accorded to the asphalt plant - though the asphalt t-)Thnft is incliAd in thp tii nt.qin1t -nmmPnr1 nrn-orr Thi schedn1 of recommended investments on projects under construction is: 1963 -- 9h mil- linn rn-z* 1QA) -- Qr) millinn noc^Q* and IoAC __ 47 mllinn noc!n Tn addition, the mission has included in its program 100 million pesos for 80 ml 0V1"fl~ neow C t erop .t 800 Million pesos) on the Wast Coast. The refinery of Mazatlan will have a~~~~~~~~~~PI UaU.JL. OLJ. tAl,J~~ UJi I dUI4iU 1.£~±L' LJ i - 16 - a coking olant. The missior was informed that finarcing arrngements had hpn made for the Mnazatlan refinnry hut thnt tnp e.quinpnt. h n not vet been purchased. Fowever, the missi)n feels that the refinery projeets shculd be nostponed and re-evaluatd 'in v'i of thý -considertions that follow:* i. Uith the completion of the present refinery projects, cannci+-r Till iie bjns, +.o 5,0 riln ./ai Doesic -~~- --- -- - - - demand (excluding LPG) will reach 350,000 bbls./day in 1966. To this m,st be added an export dAnnid nf 5,'0 bbls./day and imports of specialty products amiounting to n,00 4-./ay T-tal deAndA -p-oesi rout is thus estimated at 392,000 in 1966, leaving some spare capacity L. un te '-s's o' pDast sale w ures suolied by emex agencies, thc mission bolieves that demand along the Ies Coý-ast wil1 inrcreasý,e by close to- eceto "es b~~ J.J- Lt u~i U V bCL- LUV [ .JCUILU U1- 6 percent than the 10 nercent predicted by Pemex. iii. Mazatlan is not a center of consumption. Local deniand is estimuatd to reach 7,)uu DIS./day during LU. a considerable anount of back-nauling o: refined prod- ucts is inevitable. Tankers carrying crude _)etroleun c,nnot be utilized- for clean products. iv. From tho iiformation suuplied to the mission it -6as not clear whetber alternatives such as the continua- tion of the Guadalajnra produets line to Tepic, Tuxpan and ooints furtner north had been tnoroughly explored. The main purpose of the Rosarito r.finery is to supply coke to the therial electric plant being constructed in Baja California and it would depend for its raf mater,al cnarge on the iazatlani refinery which is also planned. The thermal electric plant will require tne equivalent of 2,600 bbIs./day, or 10 tankers per day across the Isthmus from Minatitlan to Salina Cruz. Although a positive conclusion is difficu]t to reach on the basis of available information, the nission is not convinced that an investment of the order of 800 million pesos for the Hazatlan-Rosarito complex is warranted nou. There are sericus doubts that add,tional refinery capac- ity above that already scheduled is needed, and the justification is not clear for substituting coke for Bunker "C" fuel oil for the Baja California thermal electric plant. Since a decision on new refinery con- struction need not be taken until tre beginning of 1965, this project ias not been incladed in the iission's recommencled program. * See remarks in foreword - 17 - Transportation. Broadly speaking, there are two major pipeline systems which transport products to the usuer. The n"rthern ystem comprises a gasline from Reynosa, and a refined products (excepting resLual fuel oil) line from iadero, feedng nonterrey, Torreon, Chihuahua and points alon- the way. The southern gsline runs from Ciudad Pemex to Iinatitlan and then to niex3co Uty and Salamanca and is projecterd toGuadalajara. A light products line from linatitlan to Maxico City has recently been completed. In addition, a central syst.m suppiies the inland refineries of vfexico City and Salamanca with crude petroleum from the Tampico-Poza Rica area. Capacity in the principal crude trunklines has risen to 420,000 bbls./day and is schedled to reach 560,300 by the end of 1965. The two gas systems have a capacity of about 640 million cubic feet and this will reach one billion cubic feet by December 1964. PIPELINES (kilo -e ters) Crude def±ned Total Petroleum Pro,lucts Gas 1954 2,981 2,181 290 512 1958 6,184 3,075 1,618 1,h91 1962 10,60 3,943 2,002 4,505 Transportation costs via pipeline are hirhlv comnetitive. As a case in point, the mission calculates that the cost of transporting light nroducts on tin %adero-Torrpon lirr is shout tTO cntavo npr ton kilometer, or a!jproxi-ately one-f)urth of the railroad cost over the q,mp riF_qnP Tnkimy t.Hiszo fnctn-r it osdrto,t~ehrw the planned construction of additional capacity, it can be predicted that the trend away Prom railrond tranqnnrta.tion will continum into the f-uturp_ Natural gas can be transported economically only by pipeline. The pipeline program proposed by Pemex involves the construction of np. lines anrl t.he increase in cannoify of envict+ina ln b hI addi+ini of com-)ressor stations. Fwelve Drojects are contemplated or under con- that, considering the growth of market demand and the cost factor, the new- Fipeline projects scheduled for contrcto in- -9~6 - In view of the r(commendation on refineries, the only line that should be C toa crude fro -4 -'1 44 P--m th es to4- t and1the b_ se to Cruz to carry crude from, the east to the west coast and then by sea to - 18 - Mazatlan for the refinery proposed there. This pipeline has not been included in the mission' s recom.iended profram. The other new pipelines will require 159 million pesoS. Addin: the 304 million aesos fcr ex- penlitures on pioclines under constructior, the nission,s program includes 463 nillion pesos for investment in pipelines. The views of the mission with rt-s:ect to the gaslines under con- struction are based on the estim-tod r-Te of growth of demand for natural gas and on the indicated plans of industrial consumers. Of the gaslines under construction, those evaluated below are the riost iiportant, and all of them are included in the recommended program. Mexico - Salamanca. This invcstient is directed toward increasing the capacity of the existing line oy the addition of four compressor units at Venta de Carpio. The project will assure a sup ly of gas for the new ammonia plant and other industries in the locality. Total investmaert needed for completion: 8.5 million pesos. Cd. Pemex - .-lexico. *ine compressor stations are to be constructed which will increase capacity of the -asline supplying ;exico City from 200 MMICF/D to 500 CF/D. To ensure a sufficient -upply of gas for Mexico City, at least five compressor stations are recommended for this year Lnd the others for 1964. Investment needed to com-plete project: 79.6 million pesos. Reynosa - Chihuahua Diftribution Lines. About 60 industries in the :Monterrey-ror-reon-Chihuahua area have indicated that they wish to be con- nected to this gasline. Investment: l." million pesos. Cd. Pemex - Salamaanca Distribjtion Lines. At least 40 industries between iiin:titlan. liexico and :Tnlana have indicatpd interest in natural gas. The lires to Villahermosa, :'inatitlan, and Vera Cruz are lth-r rinnnnrid Lr r-rn nmrnlPtion*; the Ori7nhn 1n i linrip-r non- struction but no work has commenced on the line to Puebla. Investment RPe.mnq. - hihinhiinlmr~c S.Mns- Rifyht -.t;tions arn planned. A shortage of capacity is beginning to appear along tne line, ncoi n l lv f. Hrm - hi t, Eher n4r -)hrnal-trin lntrz nt rinTrrrpv Gomes Palacio, and Chihuahua, the situation w.ill become acute. Only two portion of the line. Priority is reconm,enced for this project. Invest- V~' ~L ,/~rLl i-~-'~ . 0), ). ymi 1 linn peso storage facilities for refined 3roducts within the system. 1- the past Ulne _"ruo--1ra,uI wivas acUrueu a 'uLw prior-ity anu many U.A. 'U±JvS DUE ,.kavou prior to 1960 and 1961 have not been completed. In principle a high - 19 - priority has noi been given to the nrograw by Pemex and the iission agrees there is an urgent need to exnand storae canacity. One uf the factors is that Pemex considers as nor,al a Aiiiirum storag capacity of 20 days at its nrincipal bulk plants, co.anared to 25 to 70 days in the U.S.A. Fre- quertly the Pemex bulk stations are reduced to a one or tio day supply on hand. It is estimabed that an additional storcagc capacity of 2.3 nillion barrels is reerded at the key centers of distribution. A total of 14 plants are incluled in the Penex program. The rission would stress uhaU, as a natter of priority, the building progra_n should be concentrated in the first instance wherc he storage situatior is most critical--at those plants where a substantzal amount of capital has alrardv been invet-d. Tno constructiDn of tic bulk Dlant at Cn-ihuahua ia especially urgent, for instance, and aiong tnc tier )lants recomended for i~mdiate constrction are those at A zcanolzulco. Toluca and MPazatlan. iurthermore, tte iission sug-euts that no otncr bulk plants be started until thse most urgent ones are ccmeted i3 ilcluding onl; the plants of highe-t srioriwy, the .irsiorn's reco,nienäed prograir for the 1963- no- priod totals 1,7Q i esos to construct or co-olete -i I uD lk storage plants. Petrhmil vetet was settled in 1958 by a lawl/ that reaffirmed the concept of a national- iLzed etoeniusranebihell iie l-Imit, wi_UtnIn wich ,there could be no partici-)at;-)n of orivate enterprise. To Pemex is reserved the pro- duction of rac liaterials resultin, from the irstiansformtion fullowing the ref'ning process. Thn list ýC "btsicl' products includes variou dtergcrb;, aromatics, basic c' emicals, plastics and synthetic rub')er: et;,-lere, ro; en, do§ec] oenzene, LOnZene, toluene, xylenes, styrene, butadiene, Aetanoi, isoprooEnol, ethyl chori,e, et-ylcne ui- cllorije, cumene and alnmonia. TPe list is subjcct to change gnd other products of a funda.ental socio-economic inteiest tu the state are not excluded. kubsequent stages of netroci.eiii-cal mwarufacture--the trans- -ormation of bas:Lc or irtermediary products into cosumer products--is onen to urivate industry. The rcsulting structure is best Jeseribed as a gradual shiading ou public and private sectors. e.mex promotes Uroj- ects outsi,e the primary stage of ,roduction and has played an important role in fostering juint vertures; the extent of Peiex's participation depends to soine ext2nt on the local avaiiability of capital. Petrochemical investmeints proposed for the period under consid- eration are actually part of a programri stretching to 1l967, During this 1/ Constitutional Article 27, November 1958. - 20 - lon-r period Pemex envisages an investmcnt of 2.3 billion neson, approx- iiately half of which would be spent during 1963-6 . Tae proposed expend- iture would renresent close to 20 percent of Penex's total Lnvestient during the period. Tiere is ro doubt that substantial invest,iurt, will be necessary to build facilitie3 for the "basic"1 nroducts. To date nly two a,monia-fort,lizer plants and one deter-ents -lant 'iave beer co-moleted hy Pemex. Tre oroDosed program is coåposed of a detergents plart at :aro, an aromatics corplex at ilinatitlan, a chejnical co:,plex at Pajaritos, a plastics coplex at Reynosa, a synthetic rubber cormiplex at :1adero, and ammonia-fertilizer -lants at Chiiuahua and Sala,ianca. The mi,sion be.lieves that the pro-ra: as a whole is scund a:d should be carriedi forward, provided of course Lhat ýde(uate financioc can be obtained. At the sare time, the mission feels that a nan.er of thu specific petrochemical prolects chould be postponel' because of tiring, tecnnical or marketing consieratioos. TLus thu mission recom.iends a petrochemicil program for 1963-6s of 1,19- nillion pesos, or roughly 11 percent below t,le -rogram prooszed by Pe.lex. railure to compleLe a ,r. r.. w of t ine wouid iet- v pV7oe e of related investzents in orivate facilities that would use h:e Pemex ;ro-ducts. Ana such an eveit :Tould nt k baRck everly t vf ,U-t cheic al ni.as.- tics industries in 'exico. 21VEST1,8 -Y TROC{iyCALS, 1963-65 -i 1i -r o . lox i;). Vission? s itecommendations Total 1963 196Lû 1965 1963-65 Aromatics (M,inatitlan) 60.8 83.0 25.6 169.h Chemicals (Pajaritos) 48.9 158.3 157.9 365.0 Plastics (Reynosa) 20.4 128.d 105.2 2C. Synthetic iubber (adero) 24.0 97.9 55.1 201.1 Fertilizers (Chihuahua & Salamanca) 34.6 9L.5 63.0 192.1 TOTAL 188.7 562.5 46.8 1,198.0 - 21 - To place the petrochemical program in proper persouctive, it would be -,ell to ,ention tat rev7erue fromr petrochemicials vill represent by 1967 only abo ·t 10 oercent of ,ross revenues from all operations. The company s esti.nated tuat grogs revenue åill reac., 1.3 billion resos an- nually. The mission has no a of verifying each and over, one of o fl 1res but feels that th;e estimate is rather o-ptimJistic; th-t an estimate perhaps one tiiLrd lo-er woild be -iore re-aIistic. The Pemex dstimate rep- resents the opration of all 'ho plants at capacity levels (average 335 das poer vear) and the revenue has been calcuilatd on the prenise of obtainini the full quoted 1962 price. The gereral consensus is that worl petrocKe.,ical prices will go dwn rather than uo. The pan oint,. hoever. is that the regular operations aill still for- the backbone of Pemexl s existence, tholigh thcse ularnts should eventuallv rase thu averawe net return on Pe,,ex's total asjets. In -eneral, the Drojects are -ell-located near tie 3ocuces of ycinnv th ii ,too-r'- n i n itry, rnth-lr than near t.e miain cen-ers3 of consumption. 2lost of t;e glants are ]ocated uear exnort terminals, which will facilitate nossiblefob'ure eoxports. All the -!ain Yroad2 and rasil co,lnuicattions are adeegatt and in all cases there il an easily accessible -u f + v n -" 1 tý n+ v - r~ i ý -nnr -r - u yrof a rx- , e r - ~ cL ,y a ra g . t, ~ b iver 70 percent -' the reoaede isbur,e-, rnts are y forne A_oj ects. -Tith the growth of local ~ianufacturin industry, theie has been a markd shft t purhaseof equipme,,nt n exi;co.lprtofip,blrs electrical equipMert, heat exchar ers, tanks are prohlbited. Te mission has L e u stmat Uku aprximtely J een ofI VJ t U- uuta U. stL of chemical projects is accounted for by local curroncy expeneiture. The ninsion foels tcat the coorilration of construction schedules is of vital ijoruance. It -ayces little sei-se to talS about Lth o- plation of one glart or for t!-at 1atter the priority of one versus anot.he:: without reference to other repated projects. .jOt o tne plants in the prograi can )c groupea to represeet stages in ar. :ntegrat.a process. The reseyt evaluation of bhe pr0jects s based on the available source material, \-,ich included very little up-to-date and systematic market inforr'ation. 'urthermore, the ,ajority of th cost figures used to caiculate returns were supplied witrout detail. Thus, following com- ments on the major corgponents of the oe-rocne-ical pro,-ra,n are tentat;ive and sub,j-ect to con iirmation by rint:1 a-praisal studies. Deternreuts. Detergents wero tCe firsb petrociem-lca.s to be manu- facturod by Pemex. Dodecylbenzene, -Yhich is used as the basis for house- hold ard industrial deterge-t 9oders, is prcduced az the _tzcapotzalco refiner-y (capacit- h5 tonc/day) in !,Oxico City. kr icentical plant is 50 percenT comp§leted at Kadero. Total investiient cost will be approx- im-.atelY 4h ~iillion pesos. - 22 - While the available market information was not very precise, it was learnt that the consumption cf this detergert has more tha-, doubied in the past three years and ir, 1952 re&ched about 70 tons daily. Present deiand) is beirg satisfied frcm cxisting facilities. howevqr, the plant operates at uneconoric levels above its rated capacitv and unit costs have risen steeply. In additior to the consuiption of the doestic cketergent, aoproximnatelyr 8,000 tons of simrilar detergent alkylates are imported from the U.S.A. It mTay be that total doestic demand will be greater than that proIected by Pemex. On the bais_ of a 3.,0 atesos -pr ton selling ri-ce, Ppmex calu- lates that gross revenues from the Padero plant operating at capacity, ril r -iach 5 -illion esos a yvpar. The VPxica rn ri-r!rionilrably above the New York quotation of 10.2 cents ner pound (2,210 pesos per ton). The ost figure sppld ilre misson suggests that ever at the lower New Uork price the plant miht -ivc a return of 32 percent before cha-ivrgesc for the cos, t of capl-;.sl1/1<- Since te, plant is ar oady f r0 percnt complete, and considering that the available market information points to priority. Apparently construction ha- been hela up by a shortage of local kA%romiati4cs. There are two re_laUe.2 but dstinct projects -involred kULIL~~~~~U.L~~~. X1 L WU Ld iU LU U-L~. Uý Ju j U L -LU" i in the ýiinatitlan aro.Matics conplex. One is under construction (direct __. -L .' j'JL_.JUI a[I IVi UIV CI 1. L-- - - - -LI -iII ,V1 L'inestent cost: .219.9 milion pa~sL') and JL th other is ill± ~i th planning stage (investmqent cost: 109.6 'illion pesos). Produets to be manufactured include: Benzene: used as a base stock for dodecyl benzene, etnyl benzene cycIchexane ard phenol; i-secticides, solvents, oaints, steroids, asp,irins and orgaic chemi stry Ethyl benzene-styrene (SR) and polystyrene plastics Toluene: used in aviation gas, solvents and explosives Cyclohexane: a source of caprolactai for nylon According to the Bank of Mexico, donestic demand for tne basic aromatics (benzine, toluene ard xylene) used in producing cheinicals uas 1/ Cash cost figures were mae avai1ble in relation to a number of chemical projects. The mission has modified thesa by introducing rharges for depreciation estimated at 8.j percent of total investment cost. - 23 - 44,000 tons in 1962, of which 36,000 tors -:ere iLIcrte<. These figurqs apnear to be on the low side and probably jo -,ot take int. account de,and by Pet,ex. The pr spects for future denanl a>pear to be brigit. A growing nuber of private conpanies intend tä construct plants which will utilize araDtics in the production of nylon, solvents, plastics and paints. And Pemex itself will utilize 20,000 tons of ethyl berzer fPr the mnnufacture of styrene. On the suj,ly side, the tentative capacity of the Hinatitl,an aromatics complex operating on a 333-day basis will be: Benzene - 318 tons .er day roluene - 66 tons per day Ethylbenzene - 55 tons ner day Zyclohexane - 62 tons per day Xylenes - 153 tons per day A tentative appraf~sal of the market situation inuicatec an export- able surplus of benzene/tolun rf aioun i0,d ( tn,m n r v~r (a1iut 35 percent of production) -hen ti ,1ant goes on stream. Th pilart is located alongsidie a terminal for ocean going v'essels. Surlas capacty will also aLoear in the xylenes, but thece c>uld be retrned to higher octaÅne gasoli ne s f-r use as avIation gasolie. The Udex uni ts under construction- weeshdld'o opi+n- by Pe,ex for March 1963, but construction ias slowed down. The planta shou11d bk rougjh't, to c1ei ~ tlhe cnd ef 196 ojr the be ini o-~~~ 196. The basic -dex plants produce an unoalarced l,ixtuåre totally inreLaedeu to present or notuentiål art Ud sU tat, UhUC auu- tional plants wll be adced to increase the prod i:cton of benzene Irom toluene; to oroduce cyclo':exane, the raw aieia ur nylon, from benzene to obtain ethyl öenzene. The new plants will be Jepond.ent .n tle first stage of tl:ie aromatics ompilex Oeing comleedl u L ite alo tie in urith other irdustries. The new facilities pLannca _ill sub- stitute for import- .f aromatis and tneir derivatives. The mission was not ,.ble to obtain jeLtai information on coUSts, value of proouction, or returns on inveatm,nerts f-r 1e irdi-vidual plants. For the aronatics proiect as a whole, tuking the iTnvesWent cost as h83 illion pesos--including overhead and auxiliary plarts and assu-,ing Nre2ent prices--a reL':rn of 34 percent before capital charges is indi- cated. The ethylbenzene and cyclohe-.acie plarts ,:nil! have a higher prof itability. - 24 - While the new plants will have a high profitability calculated at capacity production, there are areas of doubt on the demand side. In the iudgment of the mission, the plants should be constructed in 1963-65. only if the construction schedule is coordinated with the development program of the synthetic rubber complex and with private industry programs including the project to manufacture nylon. Southern (Pajaritos) Chemical Complex. One part of the complex at Paiarito in hit nrind the "qnti_knek1 nomnounds ttqthlv l.ad and athyl fluids. It comprises the following plants: Plant Pemex Share Total Investment 1/ Status of Project in August 1964 Ethylene 100 104.1 12 months to comp]ete Ethylene dichloride 100 28. 28 months to complete Ethyl chloride 100 26.0 28 months to complete Vinyl chloride 100 23.0 28 months to complete Acetaldehide 66 56.1 18 months to complete Bromine - 43.8 Postponed Sodium - 62.5 Postponed Tetraethyl lead. The tetraethyl plant is being constructed jointly by Pemex (51 percent) and Dupont (49 percent) at a cost of 101.3 million pesos. Pemex plans to spend 43.6 million on it in 1965. Once completed the plant will operate with imported chemicals until the local facilities for the components have been constructed. One of the basic aims of this plant is to displace imports; eventually it will operate entirely on dom- estic raw materials. TEL imports at present are running at about 85 million pesos annually. The demand for TEL is closely related to the consumption of gasoline, and one of the principal factors is the shift to higher octane gasoline. The mission estimates that demand will grow to 13,000 tons by 1965 and 21,000 tons by 1970. Future growth is assured because the product, apart from tetramethyl lead, has no substitutes. On the basis 1/ Including share of participants. * Data revised in Janu!ry 196h. - 25 - of etimatcd demand, a plant size of 21,800 tons per ycar (13,400 tons of TEL) appears jusGifiable, consilering that iemex has caiculated tho breakeven point for the plant at 53 percent. £'iere will be an export- able surplus in the first ;ears of operation which snould b3 reacily marketable. Thg plant will also proiuce tetramethyl led. Ethylene. As a chenical intermeCiate, ethylcne is the basic prodict of the group. Tt is to be manufactired from ethane, which is nou used as fuel or is injected back i,to tho natural gas stream. The output of the plant ill be completely utilized bj the other units in the complex. kt the world price of 5 cenUs der pound, the value of production will reach 52 ,-illion pesos per year when operating at ca- pacity. 'thvlene derivatives. T:o of thE dtleno derivatives (ethylene dichloride ind ethyl chloride) are utilized in the proriuction of anti- knock compounds. The thirci, vinyl chlori._, forrms the s-artin; poir:b for a series of chemical products inclaiding nclyvinyl plastics. utile statIstics on total market. demand -er_- rot ivailable, the -iission -,iotÄ tnat imnports of vinyl polymer from hc U.2.A. alono run abou 10 million pesos per annun. A .nw1or. featre of eteler e derivati plante is their high profitability calculated at prosent uorli :rices and their low breakeven joints: Ethyv1 chloride Vinl chloride Capacity (t/d) 36 54 Price ( x /t) 2.750 3.025 Value of Production (Mi Mex') 33.2 54.7 Cost - Cash 11.7 23.0 Deoreciation 2.2 2.6 Return on Investmlent 78% 97% tetraethyl lcad plant that they cannot be justified independently of each o'1'' Li 1 11t;l TI:_Z),_(E ±SUJ ±5 JL UOL OLIL" V'uu U aw L~. -h returns on the in'iested c;apital are hign and the initial invectmcnt in the first Stage oi the process deparating eUaue frum naturaL gas-- has already b, en made. The .'as is presently being used as fuel. With respect to vinyl chloridc, the mission eiieves that a new suoy o the prospects for ulastic materials in .!exico should be unertaken con- current to investment in the plant. remex inucrmed the fission ThaT by 1967, de-nand will slightly exceed the capacity of the olant (19,600 tons p/a). The mission concurs with ?emex that the sodium and bromine works should be postponed until the :ajor works in the comnlex have been com- pleted. Acetaldehyde. Although not relat d to TEL, acetaldehyde can be derived from ethylene. It is widely used in the chemical industry. Total investment in the project is plan ted at 56.1 million pesos, of which Pemex's particiation will be 51 oercent. Capacity is projected at 24000 tons p/a. The breakeven point has been calculated by Peme- at 34.2 percent. Chemicals from Salt. Anoth.r part of the chemical comole-- at Pajaritos will be devoted to chericals -anufactured from salt. The joint-venture company is the Sales y Alcalic S.A. (Diamond, Nova, Lazo- Lavin) in which Peme:: has a 30 percent shaie. All the projects in this group are new. Caustic Soda and Chlorine. The salt domes at Paiaritos were to be used for the manufacture of caustic soda and chlorine. (A recent discovery will lead to using salt from Tuzandepetl, rather than Paja- ritos). The latter is needed .or the production of ethyl chloride and ethylene dichloride and therefore forms an essential part of the tetraethyl lead facilities. The demand for caustic soda is growing and is only partially catisfied by domestic production. It a;oears that a start will be made within six months on the construction of the caustic soda anJ chlorine plants. Construction will ta'Ke 16 months and the mission is of the opinion that it should be coordinated so as to be conpleted at the same time as the ethylene comole_. The facility is planned L'or a capacity of 35,600 tons and an investment of Mex. 97.5 million. At canacitv. the value of )roduction of the two rhemicals will be 28.8 million pesos. (The caustic soda and the sodium carbonate faciliti-s referred to belou trill h n inint ventvre _71th SaIns Alcalis S.A., no cash being reQuired from Pemex). Sodium Carbonate. The mission uas informed that the salt from Panaitor cntins imprit.ies whinh makc it. nrinnblP +n order fnr purer Salt domes nearby before soda ash production is undertaken. The 'fa cri +.oin~ nrnrn1i +n~ +bi ^F-+~i. --rAir - ' 1-- ne i n d - 27 - potassium salts. (According to Pemex, a new source of very pure salt by Diamond Alkali has been completed). The site selected for the chemical complex is favorably located fo sea, ra-L.L, anG' road tr U U. LJ± UIi I LL.LU UU has easy access to the Pacific coast by rail. Most of the raw materials f-or the prcese Car CLVCtL.iULbf l(ocaly- _IncudU_Ing thane, sajlt UwUater, brine from the salt domes, fresh vater and electricity. Plastic7 Complex. The petroleum complex to be constructed at Reynosa will oe composed of the following piants:e Plant Pemex Participation Total Investment Status of Froject % (million pesos) Ethylene 100 93.6 50% advanced; 8 months to complete. Polyethylene 33 109.2 All equipment avail- able on site; 12 months to complete. Ethylene oxide 50** 41.5 New Project. Amines and glicoles 0 (private) -- Polypropylene 100 250.0 New Project (now nostponed) Ethylene. The manufacture of ethylene is the key to the elaboration of the other materials. The construction of the ethylene plant should be given top priority because the contract to construct the polyethylene plant, one of the principal users of ethylene, has already been signed. There are considerable advantages to the ieynosa location, including road and rail communications with Monterrey and Tampico, export facilities, and an abundance of natural gas and water. All of the quipment from abroad has arrived. As a result of the shortage of funds to meet local expenditures, however, construction has not comenced. Local currency expenditures are estimated to account for 47 percent of the total invest- ment. The Reynosa plant will have a capacity of 36,000 tons annually and a direct investment of Mex* 112.1 million. Ethane, the raw material charge, is already available and is being used as fuel. Polyethylene. Originally, polyethylene was to be produced by Pemex. With the li.inn to manufacture Phtv1ne from ethane. however, polyethylene has been defined as a second-stage product and therefore falls within the realm of the nrivate sector. A ioint comnany with ICT and Celulosa and Derivados has been formed in which Pemex has a 33.3 nprnAnt narticination Tt hn- hz n Innan cd that n.n.inn will ho completed within 12 months. The demand for polyethylene has been estimated by Pemex as around 18 tr0 partoni pat r vnlueds ti a7 millin Naciona At rcet Mxcca o , ~aua 4. LV L LJnua -iax 505~ participation by Industria Nacional Quimica Farnaceutica. - 28 - importing polyethylene plastics valued at approximately this amount. Domme+tic dema for this plant's nvAiin+m riAll hbe nhouti 14 AAAl Enna d 19A5 and 32,500 by 19(8. In view of the demand situation, the displace- mm L Vma+ mAn +1Mhngghn profi+ahili+y of 'Whe 'l an+t h iaa believes that this plant, together with the ethylene installation, should 'LLC C ILjL .1 J. J1U .L_V ni.vii-L.i vilu CL V Vul V.L 01 C. h U.~L4 LAU PC . V A CIML,U -l program. The feasibility study indicates that, at capacity operation, investment cost is equivalent to a cost of 22 cents per pound annual capacity, not Out of lne Wita projets U eflswheitre. Thylene Oxide and Plypropylene. Ie lieerle agreemn1eU. for tnm proposed ethylene oxide and amines and glycols projects, planned for construction in 19r) and l9on, nave oeen signed. The mission accepts Pemex's justification for going ahead with these plants as scheduled. Private industry has expressed an interest in both these products. vor instance, one firm plans to purchase [,000 tons per year of ethylene oxide for the manufacture of a range of chemicals. This would absorb about 50 percent of the capacity of the respective plant. Synthetic 'Rubber Complex.* Some years ago the decision was taken in M,exico to manufacture synthetic rubber (SBR) by the emision poly- merzation of butadiene and styrene. Subsequently a plant capacity of 4h,000 tons per year was decided upon, at a total investment cost of 148.2 million pesos. However, the project, to be constructed at Madero, has been beset by both financial and technical problems and has not yet been initiated. The technical question, which must be resolved soon, is wiether to produce SBR or one of the synthetic natural rubbers such as polybutadiene as well. The financial question is related to the composition of the manufacturing group. Depending on which participants are selected, Pemex's contribution could vary from 25 percent to 45 percent. Under the petrochemical regulations, the manufacture of synthetic rubber is considered a second-stage transformation and can therefore be undertaken by private enterprise. In view of Pemex's cash problems, and the urgency of carryine out essential investments, the mission suggests that second- stage processes be undertaken whenever feasible by private Hexican capital. or mixed local and forein capital. For Pemex to particiPate in a second- stage project would probably mean the postponement of a project more directly connected to Pemex's oriiarv activities. Imnorti of riibpr hnve inreaed stadily in rPe.nt yers more than doubling in the period 1953-62 and reaching 37,308 tons at the end of the latter venr. The growth of imports has bepn cnsly tied to the increase in the number of vehicles in Mexico. Within the total picture synthpti ernhb horhab hnnliv di onprninni ni+nrl tinhbr mnq +n 1962 accounted for over 60 percent of rubber imports. In the U.S., syn- thet.in rnhbr rnnr-nh+. nt70 perent of ttal rubW onmtioM+Ann De~mand for rube ca bees--mt by two ( ' based on historical growth and (b) based on estimated vehicle registrations. In thel crow f () bercent per year Syethatc te nuber of motor vehicles would grow at 8 percent per year. Synthetic rubber is assumed to hold ^ An.'. - .I iiI~. IJ ii LaLA i - 29 - Total Jomand Synthetic's Shar3 (a) (b) (a) (b) 1953 16,092 - 2,189 1962 37,308 - 23,5h1 - 1963 40,4o0 41,276 24,240 21,766 1964 42,800 h, 46 25,680 26,727 1965 45,150 48,107 27,090 26,864 The narket f9r syntheic rebher is 75 percnt SE, :nd so e of the other types of sjnthetic rubber anre int.erchangeable wiLh SBR. in general -n. r r'r - . ..- .- l e '.. -nv -n kn1+ er -s t.e JK-..J' rbber-e -2. 20 ,'1., .ercent pr. year tJ 'he extent to thich synthetic rubber !j l L widen its sharu of the rket ill deen pafrtlya at least o turl ruutm prices. Te7 ueUeLIJ,y sL 1or botn these and syrnthetic rubber pricej to decline. Hovever, the rission freels t1,ht. --n- al.2i,,ce sh-1uld be l-adle 4or a ~4 4 c3ntinun d i p - ^-ent- o natural rub-f-r aid has projected tae folloing figures of e-ti lated imports: Total Syrthetic Natural Rubber i,ubjer RubbOr 196? 37,303 23,541 13,767 1963 L,0,668 25,-95 14,773 1965h 1h,324 28,h8h 15,8Lo 1965 48,313 31,332 16,961 Iith the doiestLc .rodction of synthetic ruboer, displacem.ent of imports ill amount to 31,000 tons by 1965 which shoulci result in Icreign exchange saving, of about Iiex.,- 164 r,,illioni. Once the synthetic rubber industry is fully integrated, all the raw naterials and intermediate pro- ducts for the process ill be manufactured in liexico. Considering tr,t the design capacity for the lant is around 4h,000 tons per year, sizeable amounts will have to be exported if the plant is to onerate at capacity for the first few years. - 30 - The mission Inderst-nds that Peiex al-c has made tentative plans to manufacture Dolvbutadiene, a new synthetic rubber. Polvbutaii:Dne has certain advanta .ev over n-ltural and SBR rubbors. It is o resistant to wear anr4 to hfat bilchun. T+ has bt-en used inix(d -aith SiR ir. automobile treads and for truck tires. Ho.yever, polybutadiene is priced U.S. 4.5 cent hove . Ihilp thie aissic n is not in a nnition to nnrxise the relative merits of one synthetic rubber versus another, it feels that synthetic rubber plant. Therefore it would appear desirable for Pemex unless it finds that t,e advantag,s of polybutadiene as a general syn- UL~ i~1.UU~. 1J ~~V~ W~ -4A, 1'-veIA the ' ~'JL ce- SJJ ., thtncul rutioe are oveLWhel Lng. wive -L vonu vo proud,, .UI4 vLue styrene plant now in Pemex's program--representing an investment of U%j Il.±~I e~.ui. i Ii UL Lo ha Oa.±U-U eAU~ W! IC I U U on investment of this plant at 33 percent before capital charges and the vue of production at capaciJ.y I.n L~.L~i The missionr recommnerds thEt, wiAn lue o .uwaru ureIIu Lo wUrmu butadiene prices, the oroduction of butadiene s!ould be deferred to a later date. Unlike butadiene, styrene not only serves as an intermea ae product for tIe manufacture of synthetic rubber but is also the starting point for polystyrene plastics. Butadiene could be imported cheaply, considering that there is a worldwide surplus at present. Ammonia.- As a product of fii.st transformation, ammonia production is reserved for the Ltate. Pemex produces synthetic ammonia in two olants (200 tons/.day each) and also has int.erests in the production of armonium derivatives (20 percent in FertLlizantes de Isturo S.A.). The petrochemical orogram includ'es the construction of a tnird amronia plant at Chihuahua. This plant is to be tne largest of the plants withs a total capacity of 400 tons per day. Natural gas -ill be sup )lied from the Reynosa-dionterrey-Chihuahua gasline. Total investment cost (17 million pesos) has been calculated at US' 98 per annual ton- capacity including the cost of carbon dioxide facilities. This is not out of line with costs elsewhere and is considerably lower tan per ton investment at ?Tinatitlan or Salamanca. As late as 1959, a synthetic ainonia capacity of more tnan 200 tons per day was considered inadvisable.1/ However, the demand for ammonia and derivatives has grown rapidly; consuriotion of nitrogenous fertilizers, for instance, rose froin 65,7b0 tons in 1)59 to an estimated 217,000 tons in 1963. These include Urea, ammon;um nitrate, amacnium sulphate and 1/ ,acional Financiera. El programa preliminar de Petroquiaica nublicada Dor Petroleos Mexicanos v su i4ercado probable, Seotember 1959. romlkcJ.rks, in1 torewor(dij - 31 - synthetic-amonia which is applied directly to the soil in some parts of exico. Current doestic production of nitrogenous fertilizers is estim- ated at 16d,900 tons, leaving a deficit of some 5,,U0 tons to be imported in 1963. Thus the aciditioual facilities for am,aonip ill displace imacrts of ammonia derivatives. The plant at Chihuahua is favorably located and connected by rail to the nai n -ricIltural centers in horth-rest ,Iexico, an area whici is not easily served by Mexican sup,1iers at present. On the basic of the feasibilfty study, thp return on investment h_f_or Amort.i7tlon nAr mnt_ i-nicr hi thout 37 nnrcnt. The ortsent sales price in Mexico for synthetic arioni_a as a raw aterial in Meox) 878 per ton normn-rer to a natl. i. p rice oivalnt to .x - 1r,r) nmr ton. Taking the -lexican price as given, the breakeven point has been calculated at 111 .-__ -- --.t 6 prentn of' ca-pacity T~ im-in J n - J , - n r t n - - r+ r-,i-vz - rl r Y - iJ r , J r. P n -r'%-Jr ) n i~ rI . ny nrr i - t. The mission recomnends that the construction schedule of the plant should Chihuahua. The minimum ti;e necessary for copletion once the financin7 [Ll 0 ~ J c 1~L ~ J UI \J7 UU1. .L l J. L A_!_2JI'Z LI4 4dA .&C V V w ~ ~ ' Financing the Program To maximize efficiency and returns, an invest:ient prograi mst always be coordinated with the financial resources available. This has not always been done within Pemex. Too many projects ave been initiated with too little financing. Overexpansion in 19b0-61 has left the cori- pany with equipment and a number of projects on its hands whose completion h Ls been delayed throu:h lack of financing. Under both Dast :nd oresent -'inancing conditions, short and medium loans are used for long-term projects such as pipelines, additions to refineries, compressor stations, terminals and purchase of tankers. Amr- tization commences more often than not before the plant has started operating, placing an additional burden on the company. This is especially true of suppliers' credits. Under these conditions, Pemex is utilizi.g a substantial part of its operating rtceipts (12-1 percent of gross receLpts in 1960- to amortize debt. Long-term loans are one of the ways to lessen the drain or current incone and speed up the development program. The mission notes that a beginning has been ,.ade in this direction. The Chase Manhattan Bark--Insurance Uroup debt consolidation in 196? for US$ '0 million, payable over a 10 year period, is the first loan of a reasonably long duration ever obtained by Pemex. It has ieant that about 27.8 million pesos per month have been released from payments of interest and princioal for investment. - 32 - In the nast e ie,, -. iade a substantial contribution from its own resources towards its irvestrment Drogram. However, the investAent n.2eds of the comoany have alTays exceeded cash surpluses from operations, thus olacing emohasis on the availability of __tFrnl finanning. Thi chF_ often resulted in a slowing or postnonement of essential investment or of nroijacts arpnriv indr connticii onr Tra number of caseh fnnds onre not sufficient to cover local currency expenditures such as labor costs, al- thourh the equinment had been nurchased ,,n- - - - -xc -~ Dc, -4-r~ ,iAn, +- 1A Pv U AL~.J>L aa L c x1s4 0~J~1L vaU -,UcLIVQ 4.0 -UU4j~ 0 0 1' L4* a variety of reasons Pemex prefers to retain earnings in Lhe business such ite:,s as reserves for replacement of equipment or for 3xploration, ~ 4. VO ~ LY U. L AI U I OVCZUU,". JL'y CLUU-LLJb UWAUtf% Lj LACU QW]LIa -Lt _LLI crease in the two contingency riserves, a substantially different figure in millions of r1ex$ Net income ina(Justea 113 99 7! k (LyV) Net increases Reserves 654 66 692 502 279 Adjusted oet income 767 767 767 85i 160 Return on Fixed Assets 6.1/o 8.9$ 10.3% 146./ 3.1, Adjusted net incoie remain,d stable for the last tLree years wnile the return on fixed assets, which rose to ih percent after the price rise, nas declined to 8 percent. This is a low rate of return for the petroleum industry, and even more so Cor such an industry in lexlco, where the op- portunity cost for low risk capital must be at least 8-9 percent. Gross revenue, mainly from domestic sales, went up by over 60 per- cent in the five-year period, 1958-1962. The rise was particularly sharp in 1)59 following an increase in the .rices of refined products, which had been held down since September 19L6. The prices of gasoline, diesel and fuel oil were ircreased at the end of 1958 and that of kerofene at the beginning of 1959. At the sarie tiie the lowest grade gasolir.e was partially withdrawn from the market. The increase in sales revenue of 23.6 percent in 1959 was attributable to both these factors as the volume of sales only expanded sli.htly. Since 1959, gross revenue has continued to r.Lse both in absolute terms and on a per barrel basis. These increases reflect to some extent - 33 - the elimination of most discounts and also changes in the product mix toward more valuable products. The following table (revised January 196h) illustrates how revenue from domestic sales including natural gas has risen on a Der barrel basis: Total gales M B/yr. and exports Mex$/barrel 1959 118.8 4,957 hl.73 1 04) 107 1 1 71 7 14 1961 142.1 6,439 45.31 I12. VA.. %11J.LV L1 U% JL1A1_ &I-%a Liu% I ,i _IVWII V1..UII - I. L AI .L44.U.LC. -"IF~0~ of the price changes is probably due to rising labor and other costs and hole charges. The company's total resources for amortization of debt and invest- mient nave grown as folows: 1962 19611 190 l 195 During the five-year period, 1958-62, total funds generated from depre- ciation, net additions to other reserves, and profits amounted to 9.1 bil- lion pesos and net borrowing 1.7 billion pesos. Income and net borrowings did not increase in 1962 as planned and the program for that year had to be cut drastically (in new projects alone from 1.5 billion pesos to 0.7 billion pesos). There was a slower than expected rate of growth in sales revenue, inability to withdraw the lowest-grade gasoline from the market, and the failure to consolidate the short-term debt of U.S.$ 50 mil- lion until late in the year. In the face of continuing cost increases, the price increase of 1958-59 did not produce sufficient internal funds for financing expanding capital expenditures. The mission has estimated that under present prices and operating conditions, a total of 3.71 billion pesos will become available to meet an investment and drilling program 1/ of 6.0 billion pesos during the 1/ Although tied to day to day operations, the decision to drill is an investment decision. Tn the oil indastry the investment program is not infrequently called "investment and drilling program." For statistical purposes, drilling can be presenTe- as total drilling expenditures or charges to operations (estimated) can be excluded. The latter method is used in this report. For details on drilling see table: Drilling Ex- penditures 1952-62. - 34 - years 1963-65. On this basis internal resources fall short of the rec- ommended program by 2.33 billion pesos. This cash deficit of course reflects the burden of carrying out the large new petronhemical program. But even without this Pemex would still require new funds to carry out first the recommended expenditures for producing and distributing petro- leum products, MT.ich comrise the bulk of Pemex's business and of Mexico's energy supplies. The table below indicates the financing required and the esti- mated distribution between new projects, projects under construction and others which include the purchase of equipment outside Hexico: PEMEX : FINANCING OF INVEST1ENT PROGRAM, 1963-65 (in millions of Mex5) 1962 1963 1964 1965 1963- 65 Surnlus Available for Investment and Contract Drilling 831 1,226 1,289 1,195 3,710 Drilling 739 769 357 944 2,57C0 Surplus Available for Recommended Perarm )rr lI inr) Q9 LC7 h9 V1 1J1O Equipment, Materials and Minor Works 194 368 396 452 1,216a/ Surplus for Major Projects bJ (102) 89 36 (201) ( 76) P ~~ - - 70l1 A r R 771 9 9 _,, Total Financing Required 803 531 829 974 2 ,33h New Projects - 42 390 571 1,010 otAn+ 192 an+o+4nLO ? i 1 102 Others - - - 192 192 _L _L t .L.14 JILL.L..JULI PICOV.O V. V1L1M1-_, 0 .i U Vu±ll-A UfjUL_J Z n V d 60 V financed externally in 1963 and 1964. This wouldreleasethe equivalent in - eso 4%-3- for --- o - rojects.- -- 4 b/ Includes new projects and projects under construction. Local currency and foreign exchange. The uivion between tue lVUl currency expenditures and foreign exchange costs of the recommended pro- gram shows tat more than 7o.8 percent of the Lotal expenalture is effecteo locally, and 63.3 percent if drilling is excluded. - 35 - ,1c:amendc I Lica] Carrency i?oreign zýxchange Pro,-ræn Co:ponent Connoient lajor prcjects 2,258 1,152 1,06 linor projects h71 471 Equipment and Matcrial (h5 575 170 Sub-total 3,h74 2,19S 1,276 ilrilling 2,569 2,569 - Ttal 6,043 h,767 1,276 Annual ,verage 2,014 1,589 .25 Iný i nn<-na , , th 3.jo prjt ined t,ou i1 r n-.rce n oa end~- itures anl L9 .ercent fCoreign excha-je. e! ocurse, the-rc 1s3o C Varla- c. ac crd n to- the . t'! e -f p r ^. . I p n al T- ject r he local compon1ent is lower than the average and ii, rfinerias, i.)lants and Itere has enaS shfttrarddom,i rcueeta a: rltL Of the ,ro-tAlof the local equipmeni ri2nufactur-re. A number oi )ieces Of easir,ient anay no l UnVer by linUrcdU iexico, inlv Ui:.1 jipe pl1ating for otorage tanks and, small purps. Thi I quite a recent development which has ereated a new financi r'ble:' fr Pe "ex, b cause of tue Jif i- culty of obtaining local suppliers' eredits, in tle sai,e -a ta t freign sup>liers' linncing has been ootaired in the past. liost of the Local nardfacturers are not in a oosition to extend credit beyond 120 cr 180 days. Unless eperations are to le cut, inte.nal cash gen,leration ýust be raised, and new borrowing a'road sheuld be atx lng-term and rovide for some disbursement against local ex:enditures. ,xternal financing needs are closely tied to the mnjor -rojýects. In the following lable, major projects have beeen grouped into two ,:ajor sub-div-isions: Recommended Local Foreign Program Currency Ixchange .ijor projects 2,258 1,152 1,106 l'!ew projects 1,010 515 h95 Project- u'.r c:ns1ruction 1,2h8 637 611 - 36 - The tables here and above have be2n derived from the recommended -n rr-^nm nA +h'n e An+IAl 1 n"in a n -a-pv n nQiAnvy-hl rhli+- n 1:irc tnnmnla+a, project information. External Financing Recoi-mendations. If the recommended investMent finance at least the full foreign exchange cost of the petroleum and petro- UneILical projects. Ps nas Vee seen,, U)1!to magus p UUo JVUU LJCeW CLLu under construction are responsible for a great rart of the foreign exchange requirIEnubSo remux. ',JU1!P Vp 01 LneremIU e. U JLUj,±-UIL pUom In UL Uul%aUU drilling and minor projects are not generally suitable for external financing. The following table shows the breakdown of the recommended investment program between local currency and foreign excnange component and within each, between financing obtained and financing to be arranged. (in millions of Mex$) 1963 126h 1965 1963-65 Recommended Investment Program: 1,756 2,118 2,169 6,043 Own Resources 1,226 1,289 1,195 3,710 Other 527 829 974 2,330 Local Currency Component: 11386 1,647 1,734 167 Own Resources 1,226 1,289 1,195 3,710 To be arranged 160 358 539 1,057 Foreign Currency Component: 370 472 435 1,277 Existing Credits 100 - - 100 To be arranged 1/ 270 472 435 1,177 1/ Includes disbursements of 500 million Desos on probable French loan of which 385 million are for foreign exchange component and 11$ zidllion for lonal eynenditures. Estimate based on arnroval of 793 million nesos of FYench credits during the years 1963-1965 with disbursements to extend Lo 1967. r-nrpsenting 70 nercent of the total nroient rnst- Pemex v4ill -nerate from internal sources over 60 of its total itnns na splnnimerentt f s, +.e-.4 i rvTmen t. rnv--wm ITnti aout 100 credits, mainly supplier credits, will provide a snall amount, about 100 - 37 - The French U"overnment is to extend a credit of $110 million to Pemex and private industry for the petrochemical expansion program. It is esti- mated that, under normal conditions and on technical grounds, about 500 million pesos of the credit could be disbursed in the period under considera- tion in the public sector projects. Of the above amount, 385 million pesos could go to the foreign exchanze component. The French credit is flexible in as much as up to 30 percent of disbursements may be used for local nurchases or labor. In Oractice. about 70 percent of the total cost of a project or a group of projects may be financed in this way. Pemex will have to raisp tht remaining 10 nernent of the cost from other sournes. Add~itAnnn1 Nnnnt-ina_.mniin+Anaw t.n 1-7 hillinn nm-n_rpmninx to hn ----- - --I---.----I- .-- arranged for the recommended program, as shown in the following table. STATUS OF FUNDS, 1963-65 (millions of pesos) Total Yearly Financing Available 3,810 1,270 VJL LLVQWJU.LeV I _.iIL%J_ PC' Existing Supplierst Credits (external) 100 33 Probable French Credit 500 167 To be Arranged 1,730 567 External credits 792 Zou Additional peso resources 938 313 Total Financing Required 6,043 2,014 The mission recommends that a maximum of 800 million pesos equivalent be raised froi external sources and that over 900 million pesos be raised from additional cash generation by Pemex. This additional external financing would be equivalent to the foreign exchange cost of the total program not already covered by existing supplier credits (100 million pesos)and the French credit (385 million pesos). Total external financing on a disburse- ments basis would total Ps.l,392 million. Pemex in the past has had to fall back on suppliers' credits or suppliers' type credits to finance its investment needs. These credits serve to increase the debt burden of the company on a short-term basis and reduce its ability for maximum growth. Amortization of suppliers' credits are met from current revenue sometimes before the projects are completed and operating. groups for purposes of external financing: 1. New Projects. These are projects which can be financed on their own or as groups of related projects;* te majority Of the recOmenUded new projects are in the petrochemicals program. Groups of projects may fall entirely in the public sector or they may leature participation of private industry. An example would be the proposed ammonia-urea facilities at Chinuahua. The manufacture of synthetic ammonia from natural gas must be undertaken by the public sector but urea production is within the domain of private industry. 2. Projects under construction. There are a number of projects under construction for which only part of the equipment has been purchased. Howevel it is unlikely that a half completed project would be financed by anyone except an equipment manufacturer, and then only if the foreign component has yet to be ordered, (The Frehch loan provides for some of these cases) The mission has prepared a project list in summary form with recommended disbursements for the 1963-65 period, presented here. Attach- ment I presents a further systematic review of the individual petro- chemical projects, both new or commenced. SUIMARY LIST OF NEW PROJECTS a/ (million Mex$) Recommended Disbursements Cost 1963-65 1. Production Facilities 77.6 77.5 Comalcalco - Absorption Plant 29.0 29.0 + La Venta (addition to existing plant) 48.5 48.5 2. Refineries 1133.4 647.5 New refineries or additions 350.0 100.0 Mazatlan - Rosarito 783.4 b/ 547.5 c/ 3. Bulk Plants 173.7 17.0 Culiacan 17.0 17.0 # Cd.Obregon (16.8) (16.8) Others 156.7 after 196' d/ L. Pipelines 346.2 217.2 Crude-Poza Rica-Salamanca-Compressors 77. 68.0 Gas-Salamanca-Guadalalara-new line 94.0 94.0 Gas-Queretaro-San Luis Potosi 49.0 10.0 Products-Salamanca-distribution lines e/ 2.7 2.7 # Products-Mexico-Toluca-new line (7.8) (7.8) * Ethane-La Venta-Pajaritos 7.7 7.7 (7TMADV TT(Zf OV' 7TT.T 1Tnr)_MrTQ 1ion Mex Recommnended Contd. Cos b 1963-65 4. Pipelines 3~.L. ~ ,I Ci,I C tFrou LT17' S- a1 -a UO± 1-I~1 C a O ,lei 11J_0J4.0U -L".*U # Crude-inatitlan-Salina Cruz-new line f/ (95-0) after 1565 //_ -% -, I- ,~ .1r ;P vroaucts-Guaymas-Los 1ochis-new line after i>b- # Products-Guaymas-Hermosillo-new line (20.0) after 1965 5. Petrochemical Plants 778.5 677.9 Minatitlan-Hydeal,Hydrar and Alkar y7.0 b/ 70.7 Madero-Styrene and Butadiene 40.0 33.0 Hadero-3ynthetic rubber (SBR) 56.3 b/ 55.6 Chihuahua-Synthetic ammonia (N13) 175.0 1460 Coatzacoalcos-Ethylene chloride, Vinyl chloride & Ethyl chloride 77.5 64.1 # Coatzacoalcos-Caustic soda and Sodium carbonate g/ (146.1) (116.0) Coatzacoalcos-Acetaldehyde 56.0 56.0 Coatzacoalcos-Administrative building for complex 35.0 21.0 # Reynosa - Polypropylene (250.0) (50.0) # Coatzacoalcos - Bromine (22.3) after 1965 # Coatzacoalcos - Sodium (31.9) after 1965 Reynosa - Ethylene oxide h/ 41.5 41.5 * Rosarito - Sulphur facilities 20.2 17.0 " Madero 29.7 25.0 " Coatzacoalcos - Lead tetraethyl i/ 43.6 43.6 * Coatzacoalcos - Ethylene facilities 104.1 b/ 104.1 6. Miscellaneous facilities 130.8 130.8 TOTAL 2640.1 1767.9 a/ as revised January 1964 E/ includes some earlier expenditures / as planned by Pemex / work alreadv started by Pemex / in operation T/ the Butadiene nroiect has been nostponed by Temex for later considention, Figure refers to Styrene only a/ a ioint venture with nrivqt. Nhrinn apnnital- Pompy nontributes no cash. Total cost 146 million h a inint vpnturp. Ppmey nntributes [At T/ a joint venture with Dupont. Total cost 101.3 million # Now omitted by Pemex. Not included in totals. - 39a - Meeting Local Currency Requirements. The very real Droblem of local currency must be faced by Pemex. The underlying strength of the Iexican oil industry is in its growth potential. In the past the con- struction of many plants and installations has been slowed or has ceased as a result of insufficient peso resources to meet the investment requirements of a growing company. Thus, one of the most irmediate ob- lectives of Pemex must be to increase internal resources generated through operations. As we have already emphasized, present cash requirements to meet the investment targets geatiy eeed the availbiliti of eonnirce and these requirements will continue to grow in the future. The problem lies in ho-iT to generate neesrlneia eore n h hr-u n ude present operating conditions. The mission agrees with Pemex officials that the primar attackh this problem should be berugme pinghis-w Cash requirements for the 1963-65 pro gramn carn best be met in this way. - 40 - Il site of iii; costs, including two devaluatiors ihich forced up costs of imported equipm,ent and aterials to Pemex, product prices were held dowin in th2 decade to l958. "his oolic o siIpplyirg energy to con- sumers nt subsidized r-ices .as un-uosed to stilate industrial ;ro.th and higher livir staåards. It ias said that petrolu b,lo.gs to the nation and th,t ali social classes ard all economic regiors ol the co-ntry have a right to benefit from their own resoirces. It became increasingly difficuilt for Permex to ,er,, ate sufficient funds for reirvestrent. Price policy blus 9acæie a ,major issue for 2emex. ir the national debate, it was argued tuat fuel prices repre'ent rl a very small proportion of total industrial costs. Even in highway trars- nortation ar. increase of 20 centavos per liter in, -asoline niices aeant only a ccst increase of 0.84 centave,s per ton kilone'er. On ,,veuuer 27 and 30, 1958, gasoline, diesel and fuel oil :rices -jere incea.ed rol- lowed by kerorene prices in 'arch 1-5'?. ihe pr-ce of GajoL.rex, z1he highest grade gasol ne, w:s raised by ti.ree cEnts pcr allon ani ie miedium octane (Supeiriexolina) bi 1.5 cer.ts. PETR-?fLei PhOP ICT 2FiJ~5 October 1)8 Jetober 1962 I'exolina (70ý oca. 1 16u. 7 (6.06 Ker sene Fuel .iJ (/bl. .1.06)h8 The retail prices of ':erosene, diesel and fuel oil had all been substantially below Caribuean-UB Golfl/ Cargo lost (whole sale) before the 1958 price increasc. .it, tne rIce ~ivcr-ace, th :rice of diesel rose sale) were idenbical until 1960 when CarLbbiean product ,rices toved tations altnough significant discountin: off ..oteci product prices is no- preval-,t in th1e i,nter-net.,onal ,,:r',e+. 7or cmeca upsspse prices no!T srrve as n point of reference end do not, repr-sent the price of ctuaL tr Ln s ,io. I slightly above Caribbean wholesale prices while kerosene and fuel oil remained below these prices. Not only were prices increased but most discounts were also discontinued. According to Pemex officials, such consumers as the "Comision Federal de Electricidad" railways and airlines no longer enjoy special discounts but buy at the ex-refinery prices. Mexolina, the lowest octane gasoline and Tractomex (low grade tractor fuel) were also partially withdrawn from the market. However, Mexolina is still sold to special groups in Mexico City and generally in the southeast at prices substantially below that of any other gasoline in the Americas, with the exception of the low grade gasoline in Venezuela. Even after the 1958 increase, Mexican ex-refinery product prices remained by and large somewhat below Caribbean and U.S. quo- tations, even though prices weakened subsequently in the international oil market. On a retail level, Mexican gasoline prices are still lower than elsewhere except in Caracas and Buenos Aires. The retail price in Houston is 11 percent higher than in Mexico City. Similarly diesel prices to the public are 59. percent lower than in Houston (24/gal.), and 31.8 percent below those in Caracas (14.20/gal.). Fuel oil appears to be the exception. Because of depressed -iorld prices both the domestic and the export prices of fuel oil in Mexico are substantially similar and only slightly below the present selling price in the Caribbean of approximately $1.9 per barrel. The 1exican Government. at the suestion of Pemex. has had under consideration for some time a change in pricing policy. Dis- counts still reimaining to snpnial orons would be nliminate qnd some prices increased. Under consideration are, complete elinina- +.inn nf T41lnaY1 ,q theP wihraanf the-- diJffenrntialJn for ktProse'ne,- and an increase in the price of diesel oil. It is expected by the company that during this year alone 15 per- cei-nt. of' the, aoli-ne sale by vliimre wu-Ilerpeetdb MP-W-linna Complete elimination of Nexolina from the market and its substitution by sent an increase in revenues estimated by the mission as follows: 1964 - 251.4 million Desos 1965 - 267.4 million pesos 1966 - 284.5 million pesos - h2 - Pemex officials had indicated bo Lhe mis7ion tkat an aproxirate ircrease of 250 million pec.s could be expected from this source of -,fhich 100 million peEss w,ould come fror, taxis and 150 from uses and trucks. 't present kerosene is s2ld at 20 centavos a liter to ho,selolds and ab 32 centavos to ot-,er use.s. By eliminating tae price differential ii, salns, the 7issior celculates that more bhan 1i0 million pesos addi- tionally -vill be forthccmi.ng. Estimates are made on the promise that 20 percent of total sales of kerosee go to Louseholds: 196h - 118.7 million >esos -965 - 13.6 mllior nt- rs 966- -7 miin peo Then oni (Ykgrldz oý -ee r-,1il lre:in,, r-,n owexic ip sold, a2t 329 rnn- tavos a liter (9.69 cents/gal2on). än increrse of 10 centavos per liter as indicated by Pemex would ean a atnt inrease in ales rpveriue froi diesel amountins to: 279 million pesos in 196h, 30d million )esos in ;ew o' t-he ieed fo 1ee uu 4-eae oersore o finance its development, Lhe misnior a~re:s that t:,e above measurezs Should be impleenedas soon as posiblJJLe. tie elimnti -on o- e- a-L-a IUdLU e Consistent 1tL 1e 1exicc[ GTcvernmcntls 2ocial and econoic polij-es. To th.e extent tnat 1,e users of iexico Jity'S taxi and Ius syste.li are sui-idizedl, the present ss"e represents a subsily to a reiativelY niin inc3 le group in the country, and contrihubes to so~e extent to over-concentration uf ponulatio in dhe cap3itaj. c-ity. To Ae extent t'ut -.ider-ranging. trucks and buses- buying gasoline in exico City but serving a wLuer geographical area-- benefit from the sale of _Hexalina it is difficult to see any juti 1i- cation for limiting the subsidy to 'Iexico City alore; ancd transpcrt policy, as well as fina. cial policy, ccnsiderations advise against extending it to the country generally, as was recognizedi in Lhe 195Ö policy change. The subsidy on kerosene when sold to hoaseholds ight coiceivably be justified as a subsidy to low inco c groups using kerosene for cooking. The m:issimn q,uestions, howev-2r, ihether simply b?cause a product ..appens to be sold bj a Government enterprise primarily to lou iicoi,e conbumers, there is a real justification f,-r a subs-idy. Similarly no justification is evident for maintaining diesel prices substantially below international prices. Pemx is Plso cncerned about the low price of LFand itsicreasng use by motor vehicles as a substitute for gasoline and diesel oil. - h3 - The el*mination of iexalina, the uithdrawal of the differential for kerosene and an increase in the price of dliesel oil ,ould produce tne following increases in gross revenues and almost the sne increases in net reverues: 1964 - 671 million pesos 1965 - 729 million pesos 1966 - 784 million pesos Ouch measures cannot be taken overniht but a determired effort to phase-in tIie ;)rice changes over r three-year perioi inuld me&n adding 200 million pesos annually to PenexIs reveriuc. as a -eneral recommLaenda- tion the mission suggests that Pemex review its entire dDmestiz price structur'e 1ron time to time in the conbext of iterraC ona1 :rices an Peme-' s finances. Other reasures. Also, Pemex should not overlook the jossibiicies of reducing costs through tec nolo)ical 9vDog'ress ara the !',ore eLficient ose of personnel, the eliminaion o1 wasteful a-d inefficient oroducts and a stronger emipha3is on both new andA u%graded ~roducts. In ter.is of Peme-'ls sales efforts, the emphasis shoulLd he Placed on .ing a market for n¿nor quality products. This is particularly inportant in tie _asclie iarket because the marg,iral revenue fro.: better rades is considerably gre<tur tian the margnal cort. and 2reate- gentities of the risr grades will be bnconing available. The f-rsb sen ight be to exte,nd tie Aarketing, of a nrprniumi as in( o-Ptanip Supergaso inex), now orinsal quantities in frontier areas, to other areas with the exception of i,exico it t-Tv 90 ocanr e nasoline sold in lexico City is. ro,ughly eg-i vale-nt. to 100 octane at sea level. An agressive polic- will be needed in the jarketing of libricating oils, tomeet the-v-ry intense com etitirn flm nrivate brands. The _mission notes that Penex has doubled in size in terms of gross sales in tte last eirh h years The organization and nrocduTes which ijeie safficient at that ti-ie ý,iay no longer adequately cover the reeds of .-ana~ellent. ThIe- tec-lni nical e nce of PeLrSis not in dine Pten+r, the mission would suggest, on t;iu basis of its brief observations, that mandemntfunctions may have |:ecc ýe toC dprmnaie or tulc ma,y be sur-e nejected arias of administration. On the ecor.omic 21,c, for instance, Po.aex des not have an e.onoic, coordn ation grou-p thiatissepraeadistt fr t chnicalJ.o, coordination and process engineering. host of the major Oil companies have such a group to cnuct a si and coniuus study of the market for petroleum products and oetrochemicals and of the :-.ain economic factors which affect demand. The importance Df this cannot be over- emphasized in view of tie uron: uiber of iroducts p'odu ced by Femex and of its interest in the ex:ort rark:t. Cost accountin, is aroher farcbional Prea ihere innovations might be made i, procedures and functions. For instance, some of the more sophisticated financial accountLna svste.mTs might be utilized for manaerial dec'sion maing. The basic point is that -ost large co:p- orations need periodic revlews of teir organization to cut costs and improve efficiency. The mission recoRmends that Pemex undertake such a review of its organizational systems and procedures. P 0 S T S C R T-P T 1. Refineries Program The Nazatlan-Rosarito refineries are justified by Pemex in terms of the need to increase refining capacity by 1967 and to take advantage of the opportunity to upgrade residual products, thus supplying coke to a CFE power plant in Tijuana from the Rosarito refinery and saving a substantial amount in crude Detroleum production and. conseauently, in drillings for corresponding reserves. The Mazatlan refinery, already begun with aid from French sources, is due to be completed in 1966, with a 40;000 b/d capacity. The Rosarito refinery, tied in with it, is to start operating in 1967. with a 50.000 b/d canacity. The 196 Rqnk missinn hnd iinrIr_imted r th fipmn for rPf insd products in 1966 by excluding 33,700 b/d required for LFG production. Thus it, i. now qor_ed with Pnm that.a minimum demand of ,h gn00 h/r will have to be met in 1966 (including exports), rather than the 392,000 b/d nrPvion.qly nainmed T+. is therefore warrant.d to incrPcz neent refining capacity from the present h2;,000 b/d, assuming 901 utilization of capcity in 1Q(A to Qnm ve in +I- nchhn'hrA ,r L7 ry00 b,/i by 1966. Ihile the completion of the two refineries on schedule would lead to snme exoces canny+ in 10A7 bi 1970 such ^n--*c+irvill hkn pill1 utilized, particularly since the mission has been on the conservative side ies will be interrelated and, further, that it would be inadvisable to tax overland transportation facilities for west coast supply in the case of an alternativo location. Pemex does not favor locating plants in consumto centers but Li suitable input sites, 1ro wher d1UIrUUIU1 may be made by pipeline. Tt is envisaged that the Nazatlan refinery may be supplied by crude from the ilinatitlan area by line and tanker, as well as by direct imports of crude on the Pacific coast if it should appear advisable. The 1-inatitian-Salina Cruz products line vill be ex- panded and partly converted for crude; a special pipeline may be con- sidered lacer. Initial refining at iazatLan will be of the order of 10,000 b/d in 1967, going up to 30,000 in 1970. The Rosarito plant will use primarily residual fuel, which in Mexico is of abnormally high viscosity, and will thus employ a product for which there is already a surplus. By the coking process, Pemex will obtain light products for the rapidly growing demand in Baja California and Sonora and will obtain at very low cost, as a byproduct, coke that the nearby CFE plant will purchase. A saving of 11 million barrels per year of crude petroleum is contemplated through this operation. As a result of these two refineries it will also be possible to step up exports of refined products to 750 million pesos, with a shift from residuals to kerosene and diesel oil, - h6 - Pemex's Dresent p1ans are more in line with the Bank1s recommen- dations, since some postponement has occurred. 2. Petrochemicals As regards petrochemicals, some changes have taken place in the proganm ndr have beepn reconrdIed in t.he text+ of thez Anex aqrd in the) li.qt on pages 38-39. However, not all changes in the program indicated in this list aeclear to the 1-iSSio0n, andc furtIher clarification maa bke necessary in consultation with Pemex. The position on the synthetio rubber plant can best be described and has consequently postponed the butadiene plant, due to the present L.UWV PILZ V.L UUUCLU.Lt:Ii-- _L11JU-UZD ctliU LUJi:1 UI L ctLUUJ_i L UUT Licibd, gone:V1" L'V1' ahead with the SBR plant - at a reduced capacity of 31,000 tons and a Cost Of l87f.:> JILL-u±o Pesos - by me"ansb of a joinlt vetf[ure- withA _)4' par1t- icipation by Pemex, 3370 participation by Polymer Corporation of Canada and ) oy Sociedad Mexicana de Crelito industrial, a Mexican investment bank. It is agreed also that the 1-lexican tire manufacturers may part- icipate in the private shares with up to 157 of the capital if they so wish. A new appraisal of trends in fertilizer consumption is being under- taken. Pemex estimates the deficit in output of ammonia - despite the very rapid production growth of recent years - at 641 tons per day in 191b, decilning to 4U5 tons by 1967. Pemex therefore is urging an ex- pansion of ammonia capacity, as well as construction of suitable bulk storage for imports on both coasts. An addition is being made to the Salamanca ammonia plant, and a new 600 ton per day plant is being studied, to use gas from Xicalango - offshore of Campeche. Discussions are under- way with British interests to obtain financial assistance for this pro- ject, for a urea plant related to it, and for an ammonium sulphate plant in Gomez Palacio, Durango. 3. Investment and financing Changes in the financial picture, including use of the French line of credit for 110 million dollar equivalent, have been taken into account in the projections of the Pemex program referred to in the Main Report of the Mission. The general summary table of the investment program, as revised by Pemex, is herewith attached, while detailed changes have not been made to the tables attached to this Annex. ATTAC-HENT 1 LIST OF PETRCREnMTCAL PROJECTS (as of March, 1903) Detergents 1. Dodecyl benzene (Madero). Capacity - 45 tons (328 barrels) per day. Tnfal investment - MPtxhhj million (rirnt .nnoqt of nlant - MP.2A-7 million). The plant is being constructed at the Madero refinery and will nm propyene tetrmemr (320 barrels np" elv) and hPn7.PnP (121 barrels per day) as raw materials. It will be similar to the plant .1 JA .~ V .A. mplex.~ aF-small qua-ities of ethyl benzene. Total direct costs of plants (excludin1g s-e rv i Ce Uni-ts) -0 I.4)2 P 8 milin 1ev 4ath and g-4Asolin are reformed to enrich them in aromatic hydrocarbons. The mixture is the solvent process. 3. Hydeal-benzene (Minatitlan). Production - 1,530 barrels daily benzene. ToLal airect cost - P1ex $4. million. Raw material: Toluene. n-Lant converts toluene into benzene plus small quantities of propane. 4. Hydrar-Cyclohexane (Minatitlan). Production - 500 barrels daily cyclo-- hexane. Total direct cost - Mex%11.2 million. Haw material: benzene and ethylene. 5. Alkar-Ethyl benzene (Minatitlan). Production - 175 barrels daily etlyl benzene. Total direct cost - Mex$29.7 million. Paw material feed: benzene and ethylene. Total investment in the aromatics complex which in addition to the above includes a distillation unit for natural gasoline, hydro-desulfurization plants and service units, will be M4ex$610. million. Pajaritos or Southern Chemical Complex 6. Ethylene (Pajaritos). Production - 110 tons per day. Total direct in- vestments - Mex$104.1 million. Ethylene is manufactured by cracking ethane gases received from the La Venta absorption plant. Raw material charge: 4.4 million cubic feet of 90 percent pure ethane. Local currency expenditures - Mex$62.9 million (60.6% of total). 7. Ethylene Dichloride (Pajaritos). Total direct investment - Mex$10 million, 8. Ethyl Chloride (Pajaritos). Total direct investment - Mex$25 million. 9. Vinyl Chloride (Pajaritos). Total direct investment - Mex$30 million. The total investnent for the above three plants including a plant to liquefy chlorine and a hydrochloric acid plant will be Mex$77.5 million of which .3 percent will be for local currency expenditures. ATACHEiSNT 1 Paje 2 10. Salt~ ell andIxt R t,ion of Brine (Pajnritos). Total investmpnt - Mex$ö5.ö million. 11. Caustic Soda and Chlorine (Pajaritos). Total investment - Mex$97.5 milliDn. 12. Sodium Carbonate (Pajaritos). Total investment - i1e4259.3 million. Pemex has a 33 psrcent p ic n in "les y Aalis S A. " (Tpzo-Lain 33xr ; Diamond alkali 17%; Oronzio de Nora (174), the company which will undertake the abov the prjcs Tot -1, - -- -al I instmnent is set at- Mex~k12 . 6 m 1ilon a nd local currency expenditures vill be about 42 percent of the total. Probable capacity: chlorine - 26,400 tons; caustic soda - 60,000 tons. n-) r~ L4'JZ 1dJ n-~d mJ~d.L ~b 1 -L~- ',,r- U-I~I - "- -1 3AJJ. _iL4 J.)L -1 -52 13D. Teuýtraethyl I.Cad (PaCjaitosU). Total InvetjSML;nt- MexI-IO.3 milo . P-mex has a 51 share in Temsa (49% Dupont). Capacity - about 21,800 tons of TE . 14. Bronine (Pajaritos). Total investaent - He4h3.8 million. As in Tebraethyl lead, Pemex u-i1l have a 51% (Nex22.3 million) participation in the productUion of bromine. 15. Sodium (Pajaritos). Total investnent - Ilex62.5 n-illion. Pemex will probibly form a riced company to produce so5ium with 51 percent participation. Probable capacity - h,227 tons of sodiuL and 6,LIh tons of chlorine. Raw material: sodium chLoride. 16. Acetaldehyrde (Pajaritos). Total invest_ent - Äe4,9.5 maillion. P. group is being organized w7ith 51 percent participation by Pemex. The Hoescht process vill be used to produce acetaldehyde fron ethylene. Capacity - 72 tons per day. Northern or Plastic Complex 17. Ethylene (Reynosa). Total investmient - 4e493.6 million. Capacity - 110 tons p.,r day. The plant will utilize e thane gas from the Reynosa Absorption plant. Local currency expenditures .ill account for h7 percent of total investment. All of the equipment (Slex032.5 million) from abroad has been purchased and is in Aexico. 15. Polyethylene (Reynosa). 2otal investment - 1,ie4109.2 million. Capacity - 2Q,000 tons per annum. Polyethylene will be ranufactured by the high pressure ICI process. Polyrey C.A., a joint company w.ith ICI, and Celulosa y Dervidos, has been formed in ihich Pemex has 33.3 percent participation. 19. Polypropylenr (,eynosa). Total investment esti,nated at Me4250 million. 1'emex is -xpected to forrä a grou-p for the developnent of this nroJect. 20. Ethvlene Oxide (Revnosa). Total investmont - H1ed 1.5 million. The companv to ranufac ture ethylene glycol will include Pemex and Industria Nacional uimico-Parmaceuitica and oossibly other nar kicipants. ATTACHEENT 1 ?age 3 Synthetic Rubber Complex 21. Butadiene (Madero). Caoacity - 921 barrels per dry; 30,000 tons per year. Total investment - Mex!ll6.6 million. Raw material - 3,363 barrels daily of butane-butylene fraction. Butane and isobutane are by-products of the process. The main use of butadiene is in synthetic rubber. Each ton of SBR requires 1,610 pounds of butadiene. 22. Styrene (Iadero). Capacity - 325 barrels per day. Total investment - Mex$60 mil lion. aw i- uat-rial - 197 harrpl, daily of Pt.h Ennn Th- rs--. nr annual ton capacity will be US'300. 23. Synthetic RIubber-SLR (,ia(-er-). Capacity - L4,000 tons per year. Total in- participatin of Pemex in the, projec, has now been fixed but may vary from V) ~ t~ c.,rr' -r +' kn i-n+nl ^na+ T -~n1 - --,c, r -n-nitin *1res n a. -+L4- c' at about 59 percent. Fertilizers 24. Ammonia (Chihuahua). The amionia plant to be constructed at Chihuahua til k2vu 'A capauLt'-' 01 4VV -11 erAnY, I-aLtu 12e Une_ rcn oeuu the very high yressure Claude process a3 at Minatitlan. Total investment anL be UUe 1x7> muiLn inc.Luing O2 facilities equivalent to USzyo per annual ton capacity. Local currency requirements - Mex871 million or U1 percent of total expeniturts. TA B¯F i PE±CX: Geo1oric,.1 and Ceophysical Studies, urface Sul-surface Gravity - ear Caology Guology 3eismoGraph Meter Magnetometer Total - - - - - - - - - - - - - - -Crews - - - - - - - - - - - - - - - - 19) 8 13 4 1 h 1 3b J^/50 9 1i 13 2 i 36 1952 ] 2,) 1 53 195. 13 10 13 -2 195lai 17 5 - 4 1356 14 13 17 5 - 195? 10 13 l' 5 -4 9 13 1 5 - 195 9 11 17 5 - 42 1960 11 12 17 -45 1961 i1 11 LO 5 - 43 1962 1 i 16 5 h 19u31l'/ 12 17 h l h7 - - -- - - - - - - - - - - Crc,w-miionhs - - - - - - - ------ - 1948 114 36 160 '5 12 367 1950 92 132 135 23 12 1952 12 3 231 43 12 562 ,9,h 13 1Ih .Eh 195 131 129 19L6 56 - sio 1956 11: 127 9 60 - m0 1957 1lh 1_7 200.5 1 -5 1936 102 132 203 60 - 1939 1½ 113 2ch 60 - hS6 1960 Ih 133 193 60 - 502 1961 122 132 195 60 - oy 1962 e32 )9) 57 3 526 1/ 1EnIe2 ce:. ate, So urc e: r or sion Dep art.ae nt, ?oerx. TABIE 2 PvEX: JExploratory liells and Semi-E;:ploratory Wells, 1952-1962 New lel 1;ildcats est. & New Horizons Total iro- Percent 1ro- Percent Pro- Percent Year Total ducers Success Tot,l ducers ŽSuccess Total ducers Success 1952 29 5 17.2 82 38 46.3 il h3 37.2 1953 L7 13 27.7 81 46 56.8 128 99 46.6 1954 53 13 2I.5 67 44 65.7 120 57 4Y,6 1955 74 15 20.3 h 31 77.5 110 46 4l.8 1956 b6 20 30.3 47 30 63.8 113 0 44.4 ly57 77 1h 18.2 31 20 6)4.5 108 34 31.5 1953 55 7.3 21 13 61.9 76 17 22.3 1959 82 11 13.h 51 31 60.8 123 )2 3:3 1960 87 15 17.3 91 62 63.1 178 77 43.7 1n61 94 8 8.5 6o 40 60.6 160 48 30.0 1962 76 9 11.8 53 134 Source: B ae oni figur'es from Permex. TAJE 3 PEJi'Y: Drilling SG2atisties, 1995-1962 -i9OAn 9i6 9 19n8 -197 -i196 1955'L Lital Vell Com-apletions 639 726 762 hh0 379 389 602 330 Producers 479 513 578 298 236 273 266 22h 3'ry 160 213 184 142 93 116 136 106 Success Iatio (percent) 79 71 76 63 75 70 66 68 eter3 Drilled (' ) , A1,O i An6 nI. 7-73 Average/Well 2,384 2,216 2,107 2,1L9 2,121 1,970 1,648 1,653 Erilling Expenditures (NIe.' 000s) 1,h4 1,3340 1,21h 927 758 649 ho9 357 Average/-eter 9-8 333 756 981 9h3 Gh7 737 654 Erilling Rigs in zerv. 126 143 lh? 133 121 120 110 88 Average Aeters/Rig 12,089 11,253 10,77v 7,110 6,642 6,383 6,032 6,201 / Preliminiary, partially Astinated by Pemex, Source Pemex. EEME: TPcoretical Durabion of Liouid IIjrocarbon Ries-erves,1952-1962 (in -illionso f ba.,relsT- R.eserves (as of Ye:-r Dc. 31) ?roduction R/P - - - - - - Crude .etroleum - - - - - - - 1953 1,e01.3 72.4 22,,1 1951 T,615.6 85.6 18329 1955 1,629.7 89.4 18.2 1956 1,663.0 90.6 1 1957 1,365.b 38.3 19.9 1958 2,264.9 93.5 24.4 1959 2,l53.2 96.4 25,5 196 0 2~, L_;58._'.3 9 . 2 4.- 1901 2,h55.L 106.8 22.9 - - - -Crud aina naturil íaz licuids - - - - 1952 1,647.1 78.9 20.9 1953 1,613.5 74.0 21.8 /954 1,671.8 85.2 1,9.6 1955 2,703.6 91.4 18.6 1956 1,741.6 94.1 18.5 195 2,065.7 92.2 22.4 1958 2,512.2 100.6 25.0 1959 2,722.9 105.8 25.7 1960 2,763.1 106.8 25.3 2,764.6 116.8 23.6 1962 2,775.5 121.6 22.8 -:ource: Lased on Pemex figures. TABuL 5 PEMEX: Theoretical Duration of Natural Gas 1eserves, 1952-1962 Reserve5 (as of Year Dec. 31) Production 1/P 1952 2,422.9 93.5 25.9 1953 £,967.6 93.Ö 31.8 1954 3,096.0 93.9 33.0 1955 4,383.4 119.ö 3o.5 1956 5,233.8 124.8 41.9 1957 6,006. 161.3 37.7 195C 6,537.9 262.7 2.9 1959 7,790.6 329.4 23.6 1960 8,124.9 341.3 23.b 1961 10,120.0 360.5 28.0 1)62 11,127.5 371.2 30.0 Source: -ased on Pamex figures. ITA.B,Lý 6 PE-EX: Production of Gruc.e letroleum and Natural Gas Liquids, 193 , 948, 1952-1962 Grude Production Natural AveraGe and Gas Daily Tear jonder.sates Liquids Total P--,oduction thousand barrelg - - - barrcls 1935 36,462 33b 30,818 106,351 19h8 j8,20 1,25-Y 59,774 163,315 ;S2 7-7,273 L,623 70,9J6 213,592 153 72,4L33 1,665 7.096 203,007 195I r3,651 1,579 85,230 233, 507 39,595 ,975 91.370 2.M0,329 1950 90,660 3,475 9h,005 257,0914 1N7 8,266 3,931 92197 22,595 1953 93,533 7,100 10o,651 275,730 1959 96, 393 n,33 105,758 29,7b9 1960 99 ,09 9,722 108,771 297,190 1962 111,30 y,733 121,5b3 333, 050 Sourcc: ie-iex. TAfTISI 7 PEDLX: Average Production of crude Petroleuuil Per 1:ell, 193a, 193, 1952-1962 Produc tion No. o f No. of Production per well Producing .roucing Year Fields Wells bbl/diy bbl/day 1930 28 611 106,351 171, lbù 37 1,058 163,315 154 5952 56 1,321 215,592 163 1.953 61 1,276 203,007 159 195 6, 1 233,507 162 1995 7; 1,7 250,329 162 1956 65 1,727 257,394 149 1957 9h 1,965 252,595 129 1953 96 2,652 275,730 104 199 103 2,287 82 99 19>0 112 3,410 297,188 c7 1961 108 3,74 320, 053 65 1)62 333,050 Source: Peacox. TABLE 8 PEEX: Crude petroleum Production b' Iajor 7,one, 1938, 198, 1952-1962 (1000 barrelz) Antigua Nueva Tamico Faja Poza Faja Istro de Year Reynosa North de Oro Rica de Oro Veracruz Tehuantepec Tabasco Total 1938 - 5,386 h:265 22,317 - 6,856 - 38.818 1948 10 10,059 7,738 34,559 - - 6,154 - 59,774 1952 872 8,153 7,6h5 51,194 596 - 9,129P 318 78,907 1953 1,610 5,288 6,549 43,782 7,914 - 7,1142 813 74,098 1954 1,850 6,672 6,606 39,11Y 21,842 513 6,867 760 85,230 1955 1,404 5,692 6,252 40,815 25,917 2,430 6,911 9h7 91,370 1956 1,693 7,456 5,937 42,816 22,124 5,485 7,035 1,550 94,095 1957 9191 8,372 5,616 45,226 15,405 3,989 7,151 4,498 92,197 1958 2,704 9,030 5,08L 53,215 1-,46o 2,15$ 7,936 10,057 100,6 1959 2,923 10,021 4,599 52,385 9,380 1,632 8,246 15,866 105,758 i960 3,214 11,074 6, 21)4 47,766 9,908 960 7,398 22,236 108,771 1961 3,395 14,807 9,930 45,892 9,484 758 6,913 25,640 116,820 1562 3,138 12,817 11,155 66,o5o 9,104 611 6,337 32,349 121,563 Note: Diffcrences due to rouidinig. Source: Pemex. EåBiE 9 PEÆX: Production of iýatural Gas, 1938, 194, 1952-1962 - -Annual Production - - - Average/day UI.LJ, UU UILUU±.?UL :.... Year meters (109) feet (109) feet (100) 1938 0.6" 24.09 66.01 1943 1.0-1 35.60 97.26 1952 2.65 93,53 255.5v 1953 2.6, 93.39 225.85 1954 2.66 93.90 257.27 155 3.39 119.77 328.l4 1956 3.53 12-.78 3b0.92 1957 '.57 161.33 '4l.99 1956 7.1. 2o2.66 719.62 1959 9.33 325.36 902.36 1960 9.66 31.26 932.L2 1961 10.21 360.55 987,80 1962 10.32 371.20 1,016.99 Source: Peme:-. TABLE 10 PEMEX, Orude Rins 4 Stills a-d Refi4ned Frod-its Obtained, 1938, 1952-1962 '/ 1962 1961 1960 1959 1958 1957 1956 1955 115 3.953 1952 19h8 1938 T- 1_ (arrels daily Total Volurme of Crude Processed 324,874 325,921 293,109 287,485 261,126 236,k51 22,0 220,563 210,234 194,650 177,054 136,080 96,h77 Refined Products Obtained: Gasoline 90,020 90,946 75,968 7h,298 65,556 56,559 49,973 45,031 33,168 13,840 39,779 26,619 15,216 Kerosene 33,444 31,83b 30,056 31,,4147 27,359 2?,37 21,1-82 !?,215 18,30 17,908 16,018 9,627 3,373 I 3e1/Gais Oil 12,825 37,639 35,586 30,177 27,260 ? ,r95 -6,336 13,27° 13,188 14,701 16,039 11,228 13,888 Puel Oil 125,433 130,162 115,227 120,717 122,186 -1,9 12l,3n6 139,750 12,1 8 107,511 95,169 81,172 5h,714 Asphalt 5,770 14,879 5,191- 3,997 b,157 4, Col 3,123 3,103 3,129 2,561 2,651 2,218 3,327 Lubricants 2,932 .3,067 2,889 2,801 2,ý177 4,516 2,?20 ,551 737 568 55o 483 95 Others 17,197 18,846 1,932 15,112 9,308 ',738 5,15 ,592 ,136 ,4,08 L,ohL 2,150 757 7,253 8,548 13,361 8,926 2,821. 3,91 3,55-4 3,C3 3,12) 2,753 2,'04 1,983 1,248 Total 324,874 325,921 293,109 2R7,!85 261,126 236,E,1 224,- 220,563 210,234 194,650 177,054 136,080 96,Li77 (Percent-ge distribut-5on) Refined Products: Gasoline 27.7 27.9 25.9 25.8 25.1 23.9 22.3 20.4 20.5 22.5 22.5 19.6 15.8 Kerosene 10.3 9.8 10.3 10.9 0.5 9.5 9.6 8.7 8.7 9.2 9.0 7.1 3.5 Diesel/Gas Oil 13.2 11.5 12.1 10.5 1.h 9.6 7.3 6.o 6.1 7.6 9.1 8.3 14.4 Fuel Oil 38.6 39.9 39.3 42.0 6.8 9.9 54.1 59.3 59.1 55.2 53.9 59.9 56.7 Asphalt 1.8 1.6 1,8 1.14 1. '.9 1.5 1.4 1.5 1.3 1.5 1.6 3.4 Lubricants 0.9 0.9 1.0 1.0 r.9 1.1 1.0 0.7 0.4 03, 0.3 0.3 1.0 Others 5.3 5.8 5.1 5.3 3.6 2.8 2.6 2.1 2.) 2.5 2.3 1.8 0.8 Loss 2.2 2.6 I ,5 3.1 1.1 1.3 1.6 1.4 1.J4 1.4 1.4 1.4 4.4 1/ Prelininary, partially estimated by Penex Source: Pemex TABLE 11 MEXICO: Domes3tic Consumption of Refined Products (in barrels/day) Gas Oil Fuel Other & LPG Gasoline Kerosene Diesel Lubricants Oil Asphalt Lesses Total 1938 48 9,108 2,323 2,83 708 42,879 1,oh. 3,159 62,149 1943 2,204 30,458 9,,419 8,232 1,44o 74,753 2,811 5,663 13i,930 1951 3,922 42,220 14,450 13,213 2,093 85,147 2,957 9,018 173,020 1952 4,881 47,589 16,715 l , 119 2,248 82,236 3,531. 9,498 13o,817 1953 5,870 51,393 18,058 15,626 2,269 81,653 3,318 9,229 187,41.6 1954 6,990 55,228 20,181 17,79b 3,107 82,425 3,90 11,950 201,165 1955 8,635 59,510 23,259 20,144 2,150 87,647 3,338 7,739 212,422 1956 10,597 66,616 26,476 23,594 2,745 85,44o 3,856 15,572 234,899 1957 12,794 69,874 27,265 29,331 2,501 101,054 5,500 nl,433 259,755 1958 15,029 75,292 28,701 31,4c98 2,611 95,602 4,973 1,777 255,512 1959 16,174 79,161 31,095 29,605 2,864 96,500 4,397 11, 45 270,8Y1 1960 18,660 81,436 30,296 31,097 3,oo8 98,386 5,841 14,344 286,068 1961 20,923 83,732 32,070 37,923 3,376 98,518 5,342 23,850 325,734 Source: Pemex. PEIEX: Exports and Imports of Petroleum and Nabural Gas, 19^<8, 198, 1951-1962 - vlJume1 --au Year E,xports Imports ik fr. £1ports Irnrts Dilf. (in thoiQd -_ f barr ) (in tosn o)f US dnlnars) 1933 9,210 1,666 7,54, 8,809 5,289 3,520 1938 13,117 4,656 8,h61 3h,897 23,037 11,860 1)51 22,393 8,442 13,951 ý2,663 38,705 3,973 1)52 15.393 7,7i6 7,6,2h 31,129 38,7h9 -7,620 1953 15,3h 8,987 6,361 2h,006 h3,712 -19,706 19$h 23.270 12.C7 10.713 hO.962 0.,899 -9.937 1955 25,836 16,173 9,4 4h,478 62,3- -17,906 156 2[1,86h 23,68$ 1.'79 !6,26 76,0o -30,1 1957 19,574 20,h52 -878 39,135 77,455 -38,320 1958 21,.269 1h, 291 6, 976 28, 528 50,671 -22,1h3 1959 20,h57 10,297 10,160 29,63& 34,573 -4,954 1961 7 r -,7,5 7,5 1 3,R6 -],5R 1961 25,h52 9,05 16,398 3,718 27,610 7,103 1962 30,nn3 h,850 25,153 37,798 18,582 19,216 1/ Barre.s and barrels equivalent of natural gas. Source: PemeJ; anco de .ýexico, TABLE 13 PEKEX: Pipelines, 1954-1962 kin k--lolweters) Refined Tear Total Crude Products Gas 1951 2,981 2,181 290 512 1955 6,109 2,628 807 674 1956 5,255 2,801 1,550 904 1957 5,377 2,912 1,550 916 1958 6,184 3,075 1,618 1,491 1959 6.411 3,075 1,618 1,718 1960 7.9hh 3.126 1.977 2.8L1 1961 10.h0 3.93 2.002 L.505 1962 1o9h0 3.,hj 9.002 0?O Source: Pemex. TABLE L JInJ. ITM' V . - . . Ci - i-- -J 4-3 1,y .- '.-LA-4 -I nAnVJ.~ 'C,L.. (in thousands of barrels) Minatitlan Salina Cruz 10,441 9,624 8,295 7,7'5 598 Iandero Chihuahua 7,494 7,176 5,987 5,803 4,217 Salamanca Aguas Calientes 2,852 2,736 2,893 2,876 2,777 Salamanca Norelia 899 884 903 869 899 TOTAL 21,636 20,420 18j070 17,313 13,861 TABLE 15 PEtIfX:. Eor of Crue Pevroleum Reidual Fuel Ol and Other Products, 1956-1962; timats' - 1963-1965 Crude Residual Other Refined Year PD troleum Fuel OilD- due11 -1,s T^+nal ------- in thousands of barrels - - - - - - - - 1956 6,617 17,106 2 23,725 1957 4,037 11,990 16,027 1958 676 10,965 7 11,648 195) 112 12, 765 414 13, 291 1960 1,100 6,436 9 7,545 1961 6,683 8,L476 - 15,158 1962 7,153 11,230 36,383 1903 7,296 11,230 18,525 196 7,543 11,447 18,995 1965 7,862 11,951 19,213 - - - - - - - -in thousands of U,S. dollars - - - - - 1956 1,_36 33,942 h5,087 1957 8,548 28,161 36,709 i11 1338 20,67 90 21, 1959 172 20,069 1,905 22,i6 1960 ,66 9217 13I 11k: O 1961 13,020 13,963 5 26,988 1963 13,500 16,200 29,700 16 ~37 16,560 - 30,53)-) 1965 l1,500 17,180 31,680 - - --- - .. dollars per barrcl - - - - - - - 1956 168 198 190 1957 212 235 229 i:198 186 187 1959 154 157 167 1960 151 lu 146 1961 195 165 178 1962 188 147 162 913 185 144 160 1904 185 11. 160 1905 184 1l4h 160 Source: 1e.ax; esti.-atas - ian i:aission. TABLE 16 PEMEX: Income Statement, 1956-1962 (in Lhousarids of Mex$) 1962 1961 1960 1959 1958 1957 1956 Gross Revenue: Domestic Sales 6,270 6,004 5,527 4,591 3,657 3,356 3,004 Export Sales 475 !435 229 366 350 1[89 564 Other Revenue 24 41 37 24 20 21 16 Total 6,769 6,479 5,793 1.,981 l,027 3,866 3,581. Deductions: Purchases of Equipment ani Merchandise 264 252 301 127 3 42 699 598 Operating, Selling and Gen. Expenses 2,410 2,162 1,773 1,573 1,484 1,325 932 Dry Hole Charges 739 7,8 794. 447 1.1D 395 266 Payments to Government 954 919 835 815 734 757 691 Depreciation and Amortization 1,185 1,185 963 881 681 561 396 Net Increases to Reserves 1,019 1,033 965 628 311 31 691) Interest C1arges 85 81 88 155 154 108 8L Total deductions 6,656 6,380 5,719 h,626 -,1.6 3,879 3,651. Net Income 114 99 74 355 (189) (12) (69) Adjus tments brought forward f rom previous periods 2 2 24. (315) 3 (20) 65 Net Income (Adjusted) 116 101 99 40 (115) (32) (14) Source: Based on Pemex data. TABLE 17 Es birates - 1963-1965 (in thousands of Mex$) Dry Hole Capital Year Expendibures Costs ../ Cost 1956 488,590 222,b00 265,790 1957 6)49,110 251,233 397,877 1953 757.765 317,7,1 439,9814 1959 927,511 480,063 )4h7,h23 1960 1,213,571 '.119,393 793,673 1961 1,340,042 592, 25v 747, 763 1962 1,)63,728 70)4,328 739,)400 19C3 ,537000 7 ,5nn 7A 8,5 196& 1,713,000 856,5CO 656,500 1/ Charged to opJr, tions. Sou-ce: P e.>; es3ti. -ies - Jan.« mission. TABLE 18 tetail Pricas of Gasolind, 1962 Rer;ular Graue Gasoline Uexico - (80 octaned21.2 ,CI de Janeiro - (u ocanJ) 2.5 Caracas - (83 octan) 17.00 liuenos kires - (regular) 22.30 ntevideo - (70 ctane)300 1,ev lork - kregular) 27.50 houston - (rewular) 26.90 Guatera - (rgular) 65.co Sourcc: Based on data supplied by Pemex. 'ABLE 19 rEXICO: CUESU PTIO:: fF DT NPT T..T.CKV nCrå..T11Slo i o93-9 COO lbs.) Year Tetraethyl Lead Ethyl fluids 1953 09,77 1960 i, ,3 19)6 12 1~ 90,L56 1962 12,928 21,02d l/ Tetraethyl lead represents 61.4 percent by weig,it of ethyl fluid. Ethyl fluid also contains etl-ylene debronide (17.6 percent) and ethylene dichloride (12.81 prcent). Seource: Penex. TAB!E 20 'EXICO: Apparent Consurption of Caustic Soda (in -tons) Thar Production Imports Total 193 13.090 27.hth2 h0.h92 199 Q7 v7 25 h53 )h28 99R00Q i 19h i195C7 33923,093 7n46 i ~ ~ ~ ~ -i -rAoLA 7" 1 1956 39,569 36,938 76,36 1nIn[1 Qt-7 Cý--17 -.>e n7 196 6 ,8 2Y f 9U7,.>4 4 -' ~ ,~r ØQQ '-I. L I l.- C ~ j 1961 72,007 20,009 92,016 uu,u0± 15,uou./ 95,u00 iuut: Iu._ UUU _ g/ Esimat based. on/L January - Setmbr Estimated by mission. Source: Nacional Financiera, S.A. IABLE 21 MEXICO: Appe.rent Consumntion of Anhydrous Ammonia (in tons) Anparent Production Imports Consumption 1953 15,852 1,752 17,609 1954 15,662 1,535 17,2.7 1955 17,481 5.498 22.979 1956 20.219 16,008 36,227 1957 21,06 16,356 37,416 1958 21,423 26,.30 7,58 1959 21,59 39,750 61,344 1960 19,676 62,433 82,114 q96n ,Ic)A 3A,994 113 3 Source! 'acional Financiera, S.A. TALE 22 MEXICO: IWPORTS OF SINTETIC AND NATURAL RUMB3ERS (metric tons) Year Synthetic Natural Total 1951 109 16,673 16;732 1952 1,379 12,018 13,397 1053 2,189 13,903 16,092 1954 3,272 18,194 21,456 1955 5,231 17,073 22,804 1956 9,858 1,330 26188 1957 12,384 11,867 24,251 1958 13,299 16,387 29,686 1959 15,267 16,202 31,469 16o 18,4h6 15,183 33,629 1961 22,213 13,037 35,250 1962 23,541 13.767 37.308 1963 25,395 14,773 4o,665 1964 28.84 15,840 4h.324 1965 31,332 16,981 48,313 Source 1957-1959 Banco de Nexico. 1960-1961 International Rubber Study Group. 1962 Danco de exco, 1563-1965 Estimated by Bank Mission. TABLE 23 Summary Hecommended Investmcnt Program 1963-64 (millions Mex$) 196 19 1965 1963-65 Annual Total Averaw 'ljor Projects 620 865 773 2,258 753 1,inor Projects 144 157 170 471 157 Equipmqnt and Apparatus 224 239 282 745 _48 Sub-total 968 1,261 1,225 3,474 1,158 Drilling 768 857 __ 2.569 Total 1,756 2,118 2,169 6,043 2,014 TABIE 24 PEMEX: MAJOR PROJE1CTS - iUi.CiARY II.VEST' EET PRGRW - PROPUSED vs. RECOIýl'UENDED (in million of Mex$) 1967 Totcl 1962a/ 1963 1964 1965 1966 & beyond 1963-196 PROGRtU PROCOSED BY PE ~X Production Facilities 118.7 47.9 - - - - 47.9 Refineri2s 174.5 374.4 321.2 278.2 155.0 310.0 973.8 Sales 18.9 164.7 - 33.4 25.0 32.8 198.1 Transcrtatior 249.8 239.4 56.3 195.0 123.0 40.0 490.7 Petrochemical Plants 138.9 679.2 492.8 155.7 157.4 100.0 1,327.7 Others - 9.3 - - - - 9.3 Total 700.8 1,513.9 870.3 662.3 460.4 327.5 3,047.5 PROGRaij RLECo: EFZDED BY 2HE ':ISSION Production Facilities 118.7 40.5 20.3 8.7 - - 69.5 Refineries 17.5 93.9 90.3 i56.o 305.0 460.0 341.1 Sales 18.4 58.2 67.3 51.2 34.4 57.3 176.7 Transnortntion 2L9.A 238.7 124.5 100.0 217.0 i0.2 453.2 Petrochemical Ilants 138.9 188.7 562.5 446.8 435.5 127.2 1,195.0 7nther - - - 9.3 - - 9.3 Total 700.8 620.0 864.9 772.9 991.9 65.8 2,257.8 Souce PEIX TABLE 25 PEEX: iAJOR PR'jECTS - PROPOSED vs. RECO ENDED INVE-ST'2ENT P'ROGRA,S, 1963-1965 (in millions of Nex$.) - - - Total - - - - - - - Yearly Average - - Proposed Recommended Proposed Recomnended Production Facilities 47.9 69.5 16.0 23.2 Refineries 973.8 341.1 324.6 113.7 Bulk Pl&nts 198.1 176.7 66.0 58.9 Pipelines 490.7 463.2 163.6 Petrochemical Plants 1,327.8 1,198.0 442.6 399.3 Others 9.3 9.3 3.1 3.1 Total 3,046.5 2,257.8 1,015.5 752.6 Source: PE2MEX. TABLE 26 P ý' " (7 ',MD1 FP, P A: ý T N P.TCg 'PROJ, M, -1 11 _ROJZCT a PROJElCTs UD3R CcNS' RUGTIC N BY YEAR hei Projects Under Projects Constructio0nTot 1963 49.1 570.9 620.0 1964 389.9 475.0 864.9 1965 571.4 201.6 773.0 TOTAL 1,010.4 1,247.5 2,257.9 Average Yearly 336.8 415.8 752.6 Source: based on mission estimates. TABLE 27 R.æCMLENDED 2ROGRAi. UT liLJ0R PROJECTS: NEW PROJCS W RO.TE UI'DER CCN'TRUCTION BY Y uF FaCI ,1963-65 (in :nfillions of Mx3 New Projects Construction Total Pn r n- cd i, i-i0I,- ý 1t P t F.U 4l.5 69.5 Býulktý PlantS 37.8'0 138OS. 9 176.7i Pipeines 1f9.0 304..2 463.2 @thners -9.3 9.3 Sub-total 325.8 724.7 734.0 Petrocheiaicals b4.6 138. i - TOT,L 1,010.4 1,247.4 2257.8 Source: based on :aissLon estim&:tes TJLE 28 PE IEX: REC01MENDED INVESTAET PROGRXI M¶INOR PROJECTS, 1963-65 (million pesos) 1962 1963 1964 1965 1963-65 Camps - 100.0 110.0 120.0 330.0 Reinrisn 10. i1.n 12. 33.0j -a-e ln n DC) nl l l 2 1Sles C_- -. 13.0 14.0 3. Transp-or4tation Uentral 1ffices - 1. £ 2 12.U 36.u ocial Iqor.bK2s - 3.0 3.5 4.0 10.5 Total 95.7 144.0 157.0 170.0 470.1 Source: PE'EX. .rj.ULLJ L_. PEffiX: RECOMMENDED INVESTMENT PROGRA4 1963 094 16 936 Production 184.8 171.1 219.2 575.1 Refireri.es 19.5 20.4 22.7 61.6 Sales 12.6 13.2 4.9 30.7 Transportation .1 3 33.3 71.1 i'arine 5.1 5.6 6.2 16.9 Tankers - 27.1 27.1 54.2 Cerltral Cffices 2.0 2J1 2.5 6.6 Total 224.0 239.5 281.6 745.1 Source: PEM'EX. TABIE 30 PEiwX: uaiwry icive3tment Proprans (in iriillions of dex) Total An. Av. -:L -,96-,- 9 - 1962 19653 194 9- 1965 -L965 PRCORA4 i PZIOPOS7.D B2 PER ~X 1. fajor Pr3octs 700.8 1,513.9 870.3 662.3 3,047.5 1,015.5 rodu'-,cu cion fEs - - 47.9 16.y Refieries 174.5 37h-h 321.2 278.2 973.8 3214.6 Sales 18.9 1664.7 - 33.4 198.1 66.0 Jt r- . - -. 9.3 Petrocheminca1S 138.9 679.2 492.8 155.7 1,327.7 442.6 2. Iinor Projects 95.7 144.0 157.0 170.0 471.0 157.0 PrLoducti-on IaICIlit.I..s - 10. 100 12. 30. 10. Other - b1.0 17.0 50.0 141.0 7.0 3, Equipment, aýrparatus and iaterials 98.5 280.0 279.7 330.6 390.3 29)6.8 Production - 230.4 197.7 245.4 629. 4 209.8 7ther - Q79 32. 85.2 26,0.9 37.0 4. Lrilling (wels) 739.1! 7(8.5 86.5 914.0 2,569.0 8,6.3 Total 1,63!4.LI 2,706.5 2,163.6 2,107.9 6,977.9 2,325.9 PhOGR4 R2C0 01r 3 BY TLL , S 1. iajor Pro)jects 700.8 620,0 86h.9 772.9 2,257.3 752.6 Production facilities 128.7 00.5 20.3 8.7 69.5 23.2 Tra,nsportation 249.8 235.7 12L,.3 130.0 463.2 iAles 18.9 58, .7.3 51.2 1/. 58.9 Other - - 93 9.3 3.1 Petrochemicas -3i. 18A. C62. 1. 1,9'0 3. 2. 1inor Projects 95.7 141.0 157.0 170.0 171.0 17.0 Production facilities - 100.0 110.0 120.0 330.0 110.0 Ote14h. 7.0 50.0 1l41.0 47.0 tl id. L4-u 4f-u >uu L U 4- 3. E-quip.aect, Apparatus and ilateriils 93.5 214.0 239,5 281.6 7L45.1 2148.6 Prodcir on - 1814.8 171.1 219.2 575.1 191. 7 Other - 39.2 68.4 62.14 170.0 56.7 4. Drilling (welIs) 739.4 768.5 856.5 9b4.0 2,569.0 856.3 C, -i-r r LLu 7 -L 7. uL 3 U14 l. U-LI-. Ijotu: Di--ferences due to rounding, Source. 1962 -- Perex, 3,963-1965 -- £ission asstiaate. FEMEX: CASH 6UAFLUb AvILABLE FR ItPSThLNT,1968-1965 (in millions of Vlex$) 1958 1959 1960 1961 1962 1963 bJ 196 j 1965 b 1. Gross Cash Receipts 4,087 5,019 5,803 6,382 6,622 6,953 7,231 7,520 2. Cost of operations, excluding daprec. a/ 2,556 2,602 2,989 3,109 3,366 3,629 3,90r 41,988 3. Cash Surplus on Operations, incl. deprec., 1,531 2,417 2,814 3,273 3,256 3,324 3,326 3,322 4. Payments to Government 654 868 8 953 936 76 P009 0Q 5. Net Cash Surplus on Operations after Taxes 677 1,569 2,027 2,320 2,320 2,348 2,317 2,275 6. Debt Payments 1,115 2,681 839 735 1,171 850 760 810 7. Total Available from Own Resources for In- vostjent (266) (1,132) 1,18 1,525 1,149 1,498 1,557 1,b66 8.. Increases in Government Equity 208 1,764 5 - - - - - 9. Borrowing 1486 1 557 1 1o36 159 j67 2 822 966 10. Total Funds for Investment 1,440 2,189 2,229 2,584 2,316 2,022 2,379 2,434 11. Decreases in Working Capital 136 (534) 309 (270) (304) - - - 12. Total Investment j 1,612 1,605 2,537 2,314 2,012 2,022 2,379 2,434 13. As in pr%gram 1,393 1,516 2,439 2,130 1,634 1,756 2,118 2,169 a/includes fixed charges; / preliminary estimates subject to change; the difference is made up of miscellaneous in production facilitics, other fixed assE:ts and financial invest- mefnts. They do not appear as a part of any program but must realistically be taken into account. Source: PEN'X, 196? -65 Mission eot:lmutc. NOTE CN CASH SURPLUS AVJLABLE FOR INVEST7ENT 1. Gross Receipts. Estimate based on five percent growth for 1963, four percent thereafter. The 196-3 igure is based on overall performance during the first five months of 1963. Pemex's own estimates for 1964 and 1965 represent a 2 percent growth rate. The Bank mission believes a four percent annual increase to be conservative. 2. Cost of Operations (excluding depreciation). Costs have been estimated to increase at between 7.8 and 7.5 percent annually. The estimate is based on a 9 percent increase in operating costs plus that portion of the reserves charged as costs. Past performance indicates that these items have been in- creasing at slightly higher rates. Both exploration expend- iture and dry holes were taken into consideratioi. Hoever, the purchase of materials and nroducts for resale will decrease over the next few years as Pemex becomes more self-sufficient. Miscellaneous exnenditures and interest charges have been estimated at present levels. 3. PayM2nts to Government. Taxes are 12 iercent of gross revenue plus Mex$141.6 million for interest on Gertificates "B". TABLE 32 (millions ':lexA) 1953 457 1954 862 1955 1,1O 1956 918 1957 1,328 1958 1,612 1959 1,605 1960 2,537 1961 2,314 1962 2,012 Source: PEMEX. TABLE 33 PE1K: SUPMARY BALANCE SHEET, 1958-1962 (in millions of Mex$) 1958 1959 1960 1961 1962 Prof i1t 4o 99 101 116 Decrease - Workinlg Capital 136 - 308 Increase - Long-term Debt 3h1 197 271 - Acditions to Reserves 311 628 965 1,033 01,019 jtdditions to Equity 208 1,76h 5 - Total 1,h6 2,h32 1,57h 1,h05 1,135 Decrease - Long-term Debt - 1,142 - - 32 Increase - Working Capital .566 276 276 Loss 115 - IEnvestmnent (net) Gross-1,612 031 Gross--1,605 72h Cros--2,,537 1 Gross-2,314 1 oross-2,012 827 Depr.- 681 Depr.- 881 Depr.- 963 Depr.-1,185 ' Depr.-1,185 Total 1,046 2,h32 1,571 1,,405 1,135 oource: PEMEX. IABLE 3l PEjTEJ STATE£NEXd OFr Fli,>:iCIAL POS7IIj' 19-62 (in thousands of Mea$ 1962 1961 1960 1959 1958 1957 1956 A SETS Gurrent Assets: Cash n MarVtableSecuritie 169,32~t (,9 i 1 37 9 ,9 9 61n 77, 2 75 ann Receivables 392,130 386,503 265,2h 200,125 165,645 190,668 161,1e5 Due from Federal Government 111,8e3 113,231 25,579 - - 37,190 165,806 Inventories of crude oetroleun. prod. & afes. 733.728 723.108 6,9.253 980.78' DrV.2? h. pB h.! 11 Iaterials and supplics 1,326,395 1,3c-,359 ,21-, 955 1,030, 65 '970,ä7 é7W 730,06 Total Crrent Assets 2,736,159 2,697,187 2,326,751 2,13L,1C9 3,712,007 1,636,662 1,196,981 Plants, Properties and Equipncrt, less d'recia tior and amortiz:tisn 9,518,641 8,592,235 7,463,094 5,888,89L 5,165,127 5,234,879 3,468,165 Cther Investments 21,1X 2,-gon 1,761 7 635 7 716 6, 6nn, -720 Prepaid Charges 30,327 29,916 35,72F 36,997 L-,046 36,518 45,875 TOTAL ASSETS 12,206,582 11,3h0,258 ?,80,031 8,067,635 6,958,996 5,916,860 5,017,750 LI/DTLTTrZS Cnrrcnt Liah-littes: Notes pay1ble and cur-nt prtien of 11 1,251,926 7,h 3 1,129,29 ?? ,12 1,13b,L65 792,398 671,123 ccon,l: payah'o 271,352 3J3,969 2312,1 l/0,99h 196,251 237,26 128,560 Accrked liabilities 3,262 7?,70Z 6-,7, 7,53! 74,117 75,515 61,724 Tota Curreit. li=lhilities 1,56,530 1,823,,27 1,729,3(0 1,223,275 1,505,763 1,105,159 861,508 Long-term Dlt: Yotes payablc 1,726,760 1,75 ,979 1,489,111 1,291,269 1,095,602 1,087,615 859,134 tonds - - - 52' ,.5 409,9hl 752,926 e vre - - - 515,3 595,10 328,013 Total Long-tcrm Dclt 726, 760 1, 75,09 1,2-,111 1,291,4; r,35,230 2,097,697 1,556,073 Other Long-tn-- LI1tiliti 2,6pp ,63> 2P' 309 33! 353 375 T T. LIABILITLES 3,315,930 3,58,194 ?,21 ,552,515,119 3,39,323 3,195,210 2,307,857 RESER=E Psnd ons 1,183,824 912,367 6W,909 451,136 336,72 321,8.6 264,002 Insurance e-d Repairs 519,907 126,726 333,517 250,258 239,hM7 222,767 220,022 Exploration and Depletien 1,719,268 -,065,151 3,396,695 2,704,607 2,201,932 1,922,700 1,944,397 TOTAL RESERVTS 6,122,9y9 5, ,04,265 ,371,152 3,L05,991 2,778,055 2,hn7,31n 2,28,.23 CAPITAL AND SURPLUS Capital - uerti,ncates 1 556,6.3 556,613 556,643 556,653 556,63 348,977 358,877 Certi'icates B 8<t 1,770,000 1,770,000 1,770,002 1,764,399 - - - Total Capital 2,326,653 2,326,643 2,326,653 2,321,043 556,653 358,877 348,877 Surplus - Accumrulated 25,176 (76,320) (175,578) (2)5 ,016) (99,551) (67,68) (62,983) - Currenb 115,834 101,596 98,558 50,138 (115,74) (32,133) (,525) -otal iurplis 1ý11,010 25,176 (76,320) (175,579) (215,015) (99,551) (67,568) TOT4L CiPTAL AND SUJ?91US 2,67,653 2,351,819 2,250,323 2,146,16L 3)1,627 249,336 251 .70 TOTAL LIÄ'B LITIKS, PESERIVES AN D, CAPITAL 12,206,582 ,340,2~8 9, , 3 9 ,c67,635 6, 5 , 9 , 1 , 6 5, 7 75 , a/ Partially estimated ny Pemex Note: Differences due to rounding TABLE 35 Ethylene Derivatives Lthanel_/2/ Lthylene-/ý/ Polyethylene hthylene Oxide (Ethvlene Glveole/ Polyester fibersl/ (.r,n-nn-e thanon",-nmni- e 4 (Diethanolamine- (Diethylene Glycol/ (Triethylene GLycolti (äcrylonitrile ,ithyl Alcohol (kicetaldehyde- (cetic jcid4' (cetic imnydirded/ (Vinyl -cetatell idu tanoL-Î .thyl Benzene2/ (3ty-reneY(Polystyrene athyl ChlorideY Ethylene Dichloride' (2thylene Diamine rlthylene Dibromide- 1/ Reynosa. rPrivate participation i'nthmaucurofPleyen and hcetaldehyde. 2/ P-aj.arito, 3/ Yacdero. t Permits have been granted for private industry to manufacture these products. Source: åased on information from Pemex. TABLE 36 Some Aronatic Petrochemicals Benzenel/ (Ethyl Benzene./ (Styrene./ SBR2/ iPolvst.en (Cyclohexanel/ (Capropactam' (Cumene (Methyl $tvrene (Dodecy Benzeneý/Ž/ (Maleie Anhydride (Benzene Hexachloride TolueneP1 (Trinitrotoluene (TNT) (Tolylene Di-T,ocyanate s .(Polyurethanies (Lenzoic Acid- (Benzaidehyde' Xylenesi (Paraxylene (Teraphthalic Acid (MetxvieneL/ (Isophthalic Acid (Crthoxylene1/ (Phthalic inlydride l/ Mi,--natitlan. 2/ Madero. Private narticipLation in the manufacture of SIR. 3/ A,Czd10.TZALCO. / Permits have been granted for private industry to manuature these products. Source: B on inforation fram Pemex.