VZCZCXYZ0010
RR RUEHWEB

DE RUEHME #6461/01 3181731
ZNR UUUUU ZZH
R 141731Z NOV 06
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC 4192
INFO RUEHBE/AMEMBASSY BELIZE 1396
RUEHBO/AMEMBASSY BOGOTA 3710
RUEHCV/AMEMBASSY CARACAS 1230
RUEHGT/AMEMBASSY GUATEMALA 3499
RUEHMU/AMEMBASSY MANAGUA 0917
RUEHNE/AMEMBASSY NEW DELHI 0238
RUEHZP/AMEMBASSY PANAMA 2142
RUEHSJ/AMEMBASSY SAN JOSE 1573
RUEHSN/AMEMBASSY SAN SALVADOR 2370
RUEHDG/AMEMBASSY SANTO DOMINGO 0706
RUEHTG/AMEMBASSY TEGUCIGALPA 1580
RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC

UNCLAS MEXICO 006461 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR WHA/MEX, WHA/EPSC, EB/ESC 
DOE FOR INTERNATIONAL AFFAIRS K DEUTSCH, M PRINIOTAKIS AND 
S LADISLAW 
DOC FOR ITA/TD/ENERGY DIVISION 
 
E.O. 12958: N/A 
TAGS: ENRG EPET ECON MX
SUBJECT: INDIAN REFINER ONLY BIDDER FOR MESOAMERICAN 
REFINERY 
 
REF: MEXICO 4494 AND PREVIOUS 
 
Sensitive but Unclassified, entire text. 
 
¶1.  (SBU) Summary.  GOM officials responsible for the 
Mesoamerican Energy Integration Project (PIEM) have selected 
only Reliance Refining in the first phase of bidding for 
construction and operation of a Central American refinery. 
The Indian firm will now have until July 2007 to prepare a 
proposal for the project.  Meanwhile GOM sources continue to 
dismiss concerns about the commitment of the Calderon 
administration as well as Mexico's ability to follow through 
on its commitment to supply the facility with heavy crude. 
End Summary. 
 
¶2.  (SBU) India's Reliance Refining was the only qualified 
company that expressed interest in operating the proposed 
Central American refinery that is the centerpiece of the 
PIEM, according to Pemex Marketing (PMI) Commercial Director 
Bernardo de la Garza.  November 12 was the deadline for 
international firms to express interest in construction an 
operation of a refinery in Central America (reftels).  As the 
only bidder to pass through the approval phase, Reliance will 
now be able to purchase all of the relevant information on 
the project developed by consultants for the Interamerican 
Development Bank (IDB).  The company will also be given "full 
access" to negotiate with PIEM member governments -- 
including the governments with preferred sites, Panama and 
Guatemala -- for the most favorable terms for locating the 
refinery.  The company will have until July 2007 to present 
all PIEM member governments with a successful proposal for 
building and operating the refinery. 
 
¶3.  (SBU) De la Garza said the GOM was disappointed, but not 
surprised that the U.S. majors they had sought to build and 
operate the facility opted not to go any further in the 
process.  ExxonMobil and Chevron told the GOM the refinery 
project did not meet their return threshold.  PMI, acting on 
behalf of the GOM and the PIEM participants, also 
disqualified a number of construction, oilfield service and 
project management firms from the bidding process -- 
including Mexican Billionaire Carlos Slim's Ideal -- because 
they did not meet the minimum standards for bidders.  De la 
Garza explained that in order to move on to the second 
bidding phase the firm had to: (1) have refining experience, 
(2) have experience processing heavy crude, (3) show they 
have the "economic capacity to build a refinery," (4) have 
demonstrated significant project management experience, and 
(5) have previously commercialized petroleum products. 
 
¶4.  (SBU) Reliance was the only firm that met the five 
criteria.  De La Garza added that PMI had sold crude to 
Reliance and found them to be a capable operator.   Now, with 
only one bidder, the process would become more of a 
negotiation than a traditional bid.  PMI, as manager of the 
selection, would develop what they believe to be a "fair 
offer" on the part of the refiner, and seal it awaiting the 
Reliance proposal.  The GOM would brief PIEM member states at 
a meeting November 15-16 on how the process would unfold from 
here. 
 
¶5.  (SBU) While disappointed that no U.S. major bid on the 
refinery, the GOM is prepared to move forward with the 
proposal.  Reliance's experience refining heavy crude at 
their Jamnagar refinery could be applied to the region, and 
de la Garza believed that the investment, if successful, 
would give the company an opportunity to expand marketing 
into North America.  Meanwhile, the GOM continues to watch 
Oxy's plans to build a topping unit in Panama, as well as the 
PDVSA Memorandum of Understanding with Panama on construction 
of a refinery. 
 
 
¶6.  (SBU) Comment: Despite the upcoming change of government 
as well as continued questions about Mexico's ability to 
provide the heavy crude feedstock given recent double digit 
annual production declines from Mexico's largest heavy oil 
field, de la Garza at Pemex and his counterparts in the SRE 
and in the Energy Secretariat responsible for the PIEM 
continue to vigorously support the Mesoamerican Refinery. 
End comment. 
 
 
Visit Mexico City's Classified Web Site at 
http://www.state.sgov.gov/p/wha/mexicocity 
GARZA