Mexico’s push for fuel self-sufficiency has encountered a persistent issue: Pemex has expanded and upgraded its refining capacity at a faster pace than it has mastered reliable operation. The state-owned oil company is being directed to process more crude domestically and export less, a strategy that appears sound given the current strong margins for refined products. However, the second quarter of 2026 revealed the fragility of this approach. Mexican refineries processed only about 1 million barrels per day (b/d), representing 58% of their installed capacity, while fuel imports saw a significant increase. Despite substantial investments aimed at reducing reliance on foreign gasoline and diesel, the success of this strategy remains contingent on a refining system that struggles to maintain consistent high-volume operations.
Up until early 2026, the data suggested progress. Clean product imports, which averaged around 750,000 b/d in 2024, decreased to approximately 520,000 b/d in the first five months of 2026, coinciding with improved refinery throughput. Runs increased from a low of 785,000 b/d in late 2024 to about 1.2 million b/d between December and March 2026, bolstered by the ramp-up of the Dos Bocas refinery and Tula’s new coker unit.
However, this recovery began to falter. Crude processing started declining in April and fell back to around 1.01 million b/d by June. Conversely, product imports rose, reaching approximately 620,000 b/d in May and 700,000 b/d in June. This reversal highlighted a critical weakness in Mexico’s pursuit of self-sufficiency: while the country can reduce fuel imports when Pemex refineries operate at higher rates, it has yet to demonstrate the ability to sustain these higher rates consistently. Even at its recent peak of around 1.2 million b/d, the Mexican refining system was utilizing only about two-thirds of its approximately 1.75 million b/d installed capacity (excluding the Deer Park refinery in Texas). By the second quarter of 2026, utilization had dropped back to around 58%. This represents a poor return on a system into which Mexico has invested billions of dollars through refinery upgrades, new conversion units, and the construction of Dos Bocas.
Furthermore, Pemex’s renewed dependence on fuel imports comes at a particularly challenging time. Purchasing gasoline and diesel from the U.S. Gulf Coast when crack spreads for both products are near record highs places additional strain on the company’s finances. In June, Mexico imported around 155,000 b/d of diesel and 340,000 b/d of gasoline from the United States, at a time when diesel and gasoline cracks averaged $54/bbl and $44/bbl, respectively. By mid-August, U.S. diesel cracks had already reached $85/bbl, intensifying the financial pressure.
The issue is not that these investments have yielded no positive results. Tula has shown marked improvement, with utilization rising from approximately 66% in the first half of 2025 to around 79% a year later. The refinery processed nearly 249,000 b/d on average from January to May 2026, with Pemex attributing some of this improvement to its new delayed coker.
Pemex is also achieving a better product slate from the crude it does process. Combined production of gasoline, diesel, and jet fuel reached 699,000 b/d in Q2 2026, a 9% increase from 642,000 b/d a year earlier, while crude processing increased by only about 3%, from 980,000 b/d to roughly 1 million b/d. Fuel oil output decreased to 191,000 b/d from 222,000 b/d, with its yield dropping to 18.9% from 22.7%. This is significant because high residual fuel oil output has long been a drawback of Pemex’s refining system. The latest figures suggest that investments in cokers and other conversion capacity are beginning to enhance the value derived from each barrel. In essence, Pemex is improving its ability to produce the desired products, but it has yet to solve the fundamental challenge of maintaining consistent crude throughput in its refineries.
Frequent technical failures across the Mexican refining system appear to be the primary obstacle. Dos Bocas, ironically the newest refinery in the portfolio, has experienced recurrent disruptions since early 2025, including issues with power and cogeneration systems, process unit shutdowns, leaks, and fires. An electrical failure in January 2026 disabled the coker, catalytic, and hydrodesulfurization units, reportedly deferring approximately 150,000 barrels of crude processing. Salina Cruz has also faced repeated fires and operational problems, while Tula, Minatitlán, and Salamanca have dealt with isolated disruptions related to power, equipment, weather, or processes.
Dos Bocas serves as a clear example of the discrepancy between theoretical capacity and actual, reliable output. The refinery, which cost over $20 billion, has reportedly reached its full 340,000-b/d nameplate capacity on certain days in 2026. However, its average throughput in Q2 2026 was only 144,000 b/d, equating to roughly 42% utilization. The challenge is no longer to demonstrate that the plant can meet its design rate, as it was in its first year of operation, but rather to see if it can maintain operations anywhere near that level.
This inconsistency significantly diminishes the economic attractiveness of Mexico’s refining strategy. Pemex is encouraged to retain more crude domestically because strong crack spreads can make refining more profitable than simply exporting the crude. However, if domestic refineries cannot sustain high utilization rates, Pemex forfeits some of its crude export opportunities without fully realizing the downstream margins. Crude exports averaged around 550,000 b/d from March to May 2026 (during a period of peak prices), a decrease from approximately 780,000 b/d a year earlier. Despite this, Mexico had to increase fuel imports as refinery runs weakened.
Financial challenges exacerbate the situation, preventing prolonged inefficiency. Pemex carried $77.5 billion in financial debt at the end of June 2026, with an additional $14.6 billion in supplier debt incurred in 2025 restructured over eight years. Although total debt has decreased considerably since 2020, this improvement was not solely driven by operating cash flow. The federal government contributed approximately $20.6 billion in capital during 2025, alongside pre-capitalized securities (P-Caps), bond repurchases, and early repayments. Consequently, Pemex’s financial distress could pose a direct threat to Mexico’s sovereign credit profile, given its increasing reliance on public funds and the absence of changes in financial management.
This makes refinery reliability more than just a technical issue. Mexico’s strategy relies on the assumption that billions of state funds invested in rehabilitation, conversion projects, and Dos Bocas will lead to structurally lower fuel imports. To date, Pemex has shown an ability to improve yields and occasionally boost throughput significantly, but it has not demonstrated that these gains can be sustained. This is the true test for Mexico’s refining initiative. Pemex is becoming more adept at converting crude into gasoline, diesel, and jet fuel. However, until its refineries can operate reliably at much higher rates, the country risks incurring double the cost for this self-sufficiency strategy: first, for the capacity being built, and second, for the imported fuels still required when that capacity fails to deliver.
