January 10, 2019 / 5:23 PM / 12 days ago

UPDATE 1-Falling Mexican fuel production adds to ongoing shortages

(Recasts with comments on refineries, background on output and shortages)

By Sheky Espejo

MEXICO CITY, Jan 10 (Reuters) - Key Mexican oil refineries are shut down, Mexico’s president said on Thursday, as the government’s drive to stamp out gasoline theft from pipelines is pressuring the distribution of supplies from terminals across the country.

Declining output at refineries owned and operated by state-run oil company Petroleos Mexicanos, known as Pemex, is forcing the firm to meet demand by relying more heavily on imported motor fuels, which President Andres Manuel Lopez Obrador has pledged to cut once more gasoline and diesel can be produced at home.

“There are (Pemex) refineries that have been shut down for a while,” said Lopez Obrador at his morning news conference.

The company’s 177,000 barrel per day (bpd) Madero refinery has not produced fuel in a “long time,” while the 285,000-bpd Minatitlan refinery is “shut down or producing little,” he said.

Pemex owns and operates six oil refineries in Mexico with a joint capacity of 1.63 million bpd of crude processing, which last year worked below half capacity.

Leftist Lopez Obrador, who won a landslide election on promises to boost domestic refining capacity while avoiding gasoline price spikes, emphasized that the country has enough fuel supplies and that only distribution problems persist.

Pemex’s largest refinery, the 330,000-bpd Salina Cruz, just recently resumed production, the president said, without offering further details.

The refinery, located on the coast of southern Oaxaca state, was producing about 52,000 barrels per day (bpd) of gasoline in November, according to the most recent published Pemex data. The facility produced about 91,000 bpd of gasoline in 2014.

Overall, Pemex’s refineries are producing about 200,000 bpd of gasoline according to official numbers, while another 600,000 bpd are being imported, almost all of which comes from U.S. refiners.

“We have enough (gasoline) reserves, ships are arriving, we have enough fuel, that’s why we’re meeting this challenge,” said Lopez Obrador.

Still, long lines of drivers are forming at gas stations in the Mexican capital, as well as in several states, since earlier this week as the government crackdown on fuel theft has led to slower fuel distribution, primarily by rail and trucks.

Meanwhile, at key Mexican import hubs, bottlenecks for discharging imported fuel have formed where more than 7 million barrels of fuel languish, according to traders and Refinitiv Eikon data.

Additional reporting by David Alire Garcia and Veronica Gomez; Editing by Chizu Nomiyama and Bill Berkrot

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