(Bloomberg) -- A new refinery operated by Mexico’s state oil company is starting tests to produce ultra low-sulfur diesel, paving the way for increased domestic production as the country’s demand for the fuel grows.

“Today we’re going to begin testing the diesel plants with already-refined diesel that will allow us to begin producing ultra-low sulfur diesel,” Petroleos Mexicanos Chief Executive Officer Octavio Romero said Friday during President Andres Manuel Lopez Obrador’s daily press briefing. “In the next few weeks, we’ll begin testing regular gasoline, and later unleaded gasoline.”

Testing at the company’s flagship Dos Bocas refinery, in Tabasco state, starts as domestic demand touches a 6-month high amid strong economic activity. Elsewhere, global markets are struggling amid rising inventories and falling profit margins after a warm winter diminished demand for heating fuel. Rising domestic production means Mexico could import less. In March, roughly 60% of all diesel consumed in the country was imported from other markets, including the US.

Read More: Pemex Ekes Out Tiny Profit as Oil Production Decline Resumes

Pemex expects output from its refineries to reach almost 1.5 million barrels per day by the end of the year, with about 1.2 million barrels of gasoline, diesel and jet fuel being produced daily by September, Romero said.

The company also is planning to seek approval to explore 45 new wells during the next presidential administration, and estimates total petroleum reserves will stand at about 7.5 billion barrels by the end of this year, according to Romero.

A new coker plant at Pemex’s Tula refinery in Hidalgo state is expected to begin operations by July, while construction on a second coker in Salinas Cruz, Oaxaca, will be about half complete by September, Romero said.

The projections come a week after Pemex posted a slight profit in the first quarter as production slipped, with government support helping to prop up the debt-saddled company. Output has withered to less than half of what it was two decades ago. 

Pemex stands as one of the greatest challenges Mexico’s next president will inherit. Slashing its nearly $102 billion debt burden — the most of any oil company globally — is key to boosting output, given money that could be spent fixing aging infrastructure instead is being used to cover interest payments. 

--With assistance from Lucia Kassai and Cyntia Barrera Diaz.

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