By Adriana Barrera

PARAISO, Mexico -Mexican President Andres Manuel Lopez Obrador formally opened a major new oil refinery on Friday, a signature project for the leftist leader who argues it will help the country cut a longstanding dependence on foreign gasoline and diesel supplies.

The Olmeca refinery owned and operated by state-run oil company Pemex is billions of dollars over budget and still under construction, but that did not stop Lopez Obrador from headlining a splashy inauguration ceremony at the facility built just off the Gulf coast port of Dos Bocas in his home state of Tabasco.

In a speech, Lopez Obrador dismissed critics who argue that fossil fuels should no longer be part of Mexico’s energy future, while also criticizing past governments for failing to build a new refinery in nearly four decades.

“During all this time, they bet on selling crude oil and then buying gasoline, diesel and other fuels in foreign lands,” said Lopez Obrador.

But officials have said the Olmeca refinery likely will not be ready to start producing motor fuels until 2023, as months of testing are necessary once construction is complete.

Lopez Obrador himself recently conceded the facility will end up costing between $11 billion-12 billion, not the roughly $8 billion he originally set as its maximum cost.

In April, sources close to the project told Reuters it will cost at least $14 billion while other reports have put the final price tag several billion dollars higher.

Two people familiar with the matter recently told Reuters the new refinery will only be running near capacity in 2025.

The president, a leftist resource nationalist, argues that the refinery can help wean Mexico off of imported motor fuels, almost all of which is supplied by U.S. refiners, which he says undermines the country’s sovereignty. He also believes the refinery can better protect Mexican motorists’ wallets from the volatility of the international oil market.

The refinery, with a top crude processing capacity of 340,000 barrels per day, will be Pemex’s largest once it comes online.

In separate remarks prior to the president’s speech, Pemex Chief Executive Octavio Romero said the Salina Cruz refinery in Oaxaca, currently Pemex’s biggest, will also be upgraded to include a major new coking plant, which is needed to more efficiently process heavy crude into higher-value fuels.

Currently, only three of Pemex’s fully-operational domestic refineries feature coking plants.

Romero said construction company ICA Fluor has been awarded a turnkey contract for the Salina Cruz coking plant, which he said will come online in 12 months.

The Pemex boss did not detail the additional cost needed for the project, only that $1.4 billion had already been spent before it was suspended for six years.

(Reporting by Adriana Barrera; Writing by Isabel Woodford and David Alire Garcia; Editing by Anthony Esposito, Daniel Wallis, Marguerita Choy and David Gregorio)

By Nichola Groom

(Reuters) -President Joe Biden’s administration on Friday unveiled a five-year proposal for offshore oil and gas development in areas of existing production, and said the final plan may have anywhere from zero to 11 lease sales.

The range of options, between two auctions a year and none at all, sought to balance the administration’s efforts to fight climate change with its calls to increase oil and gas supplies in the face of soaring fuel prices.

The proposed plan includes no more than 10 possible sales in the Gulf of Mexico and one in the Cook Inlet off the coast of Alaska, the Interior Department said, adding that areas of development could be winnowed further after public comment.

The proposal mirrors the recently expired five-year offshore drilling plan put forward by former President Barack Obama’s administration. It is much narrower than one proposed but not adopted in 2018 by former President Donald Trump’s administration, which offered acreage off most of the Atlantic and Pacific as well.

Secretary of the Interior Deb Haaland said the proposal does not mean the administration will move forward with any of the auctions.

“From Day One, President Biden and I have made clear our commitment to transition to a clean energy economy,” Haaland said in a statement. “Today, we put forward an opportunity for the American people to consider and provide input on the future of offshore oil and gas leasing. The time for the public to weigh in on our future is now.”

The department will take public comments for 90 days before writing a final plan. There is no mandated timeline for the completion of the process, a senior Interior Department official said on a call.

Release of the document, which is mandated by Congress, came a day after the expiration of the previous plan, and late in the day ahead of the three-day July Fourth holiday weekend.

In a statement, U.S. Chamber of Commerce President Marty Durbin said the plan sent “mixed signals” to consumers and businesses.

“Reliable, affordable energy requires long term planning, a government-wide approach and clear signals to the market,” Durbin said in a statement. “This proposal provides none of that.”

Center for American Progress, a liberal think tank, praised the administration for putting “a no-drilling option on equal footing with drilling options” and said it would advocate for that choice.

(Reporting by Nichola Groom; Editing by David Gregorio)

(Reuters) – Susan Collins started her job Friday as president of the Federal Reserve Bank of Boston, becoming the first Black woman to lead a regional branch of the U.S. central bank as it faces 40-year-high inflation and mounting fears of recession.

Collins will have her first chance to weigh in on monetary policy in just over three weeks, on July 26-27 when she’ll join the Fed’s 17 other policymakers to decide interest rates.

They are widely expected to deliver another 75-basis-point rate hike, bringing the Fed’s policy rate to a range of 2.25%-2.5% on the way to what they have signaled will likely be around 3.4% by year’s end — up from zero at the start of the year.

Fed Chair Jerome Powell says the Fed’s fight against inflation — running at more than three times the Fed’s 2% target — is “unconditional.” Though it ideally can be won without undermining the current strong labor market, he said earlier this week, the process “is highly likely to involve some pain.”

Friday brought fresh signs of that coming pain, with an index of U.S. factory activity slowing more than expected and an estimate of U.S. economic growth published by the Atlanta Fed https://www.atlantafed.org/cqer/research/gdpnow turned negative for the most recent quarter.

Still most economists believe U.S. employers continued to add jobs last month, albeit at a slower pace than in recent months, and that the unemployment rate likely held steady at 3.6%, near historic lows.

Collins, an economist and public policy professor, most recently served as provost at the University of Michigan. She succeeds Eric Rosengren, who retired last fall amid an ethics probe into personal trading by Fed officials during the pandemic.

In addition to helping set U.S. interest rates, Collins’ job entails overseeing the Boston Fed’s banking supervision, community outreach, and its lead role at the central bank in research on technology that could be used if the Fed adopts a central bank digital currency.

(Reporting by Ann Saphir; Editing by Alistair Bell)