Pemex to Spend $5.5b on Plant Upgrades, Pipeline

Mexico state-run oil company Pemex on Thursday said it will invest nearly $5.5 billion in expanding the country's largest natural gas pipeline, building a fertilizer plant and boosting output of cleaner-burning gasoline and diesel.

Pemex said it would spend $2.5 billion on the second phase of the Los Ramones pipeline, which will eventually run from the U.S.-Mexico border to central Mexico to help satisfy growing demand for gas by boosting cheap imports from the United States.

It will also invest $2.8 billion on upgrading five of its six refineries to process cleaner fuel, as well as $184 million on a fertilizer plant.

Pemex currently has to import about half of its gasoline and diesel needs due to lacking domestic capacity.

Pemex aims to produce some 360,000 barrels per day in new output of cleaner-burning gasoline and diesel. It was not clear whether the increase implied lower production of conventional fuels.

"We expect to have the ultra-low-sulfur diesel plants in production toward the end of 2017," Pemex Chief Executive Officer Emilio Lozoya said.

Pemex says the new diesel project will reduce sulfur contamination of the air by 28.3 tonnes a day from the five refineries, in a bid to boost the company's environmental image following a major crude oil spill into a river in Nuevo Leon state last month.

(Reporting by David Alire Garcia and Ana Isabel Martinez; Editing by Jonathan Oatis)