The Mexican state-owned Petroleos Mexicanos has acquired a full-ownership deal of a Houston-area refinery it shares with Royal Dutch Shell Plc.
As per the statement, Pemex initiated a sudden bid for a 50% stake in the facility in Deer Park for $596 million. The government will disburse the said amount by the end of the fourth quarter. Shell will have the controlling shares in the adjacent chemical plant.
The Mexican President Andrés Manuel López Obrador planned to reform the country’s Electricity Industry Law. The private sector and lawmakers have not appreciated his efforts, in any case. The disagreement can impact relations with regional partners like Canada and the USA also cause changes in the governance as there is a legislative election in June.
The president is striving to make the country self-sufficient in the energy industry. Pemex, he believes, will recover from the energy crisis, and customers will not encounter any hardships such as higher gas prices.
Pemex has remained under the spotlight for a host of reasons, including financial difficulties, theft, and charges. The corporation had $101.800 billion in assets as of 2019. Until March, the six refineries attempting to increase output were only operating at half capacity. Some argue that the refineries’ profit margins are too low.
The company had suffered explosions and controversial allegations of violation of human and labor rights.
Profits and output are likely to change in a new direction as a result of the new endeavor. The government believes Pemex’s performance will increase, making the facility’s share a solid asset.
Pemex purchased Shell’s shares in the Deer Park refinery in 1993, allowing the crude oil production to perform efficiently; the collaboration is now 28 years old. The corporation had put more than $200 million into stakes and inventories at the time.
Between 1993 and 2018, the refinery generated approximately $2 billion in dividends. However, revenues dropped as the cost of the Mexican oil that the factory processed increased. For the past three years, the flagship crude oil ‘Maya’ has plummeted by about 60% or 70,000 barrels per day.
Lopez Obrador tweeted about the deal:
“The most important thing is that in 2023 we will be self-sufficient in gasoline and diesel; there will be no increases in fuel prices,” he added.
This deal will be the first time that Mexico’s state-owned oil firm will be entirely responsible for the operation of a foreign refinery. Shell intends to produce lower-carbon fuels to minimize hydrocarbon emissions; therefore, it is restructuring its portfolio away from refining and chemicals and oil.
The refinery can process up to 340,000 barrels of oil per day into gasoline and diesel. The joint venture was amended three years ago to reduce imports of Mexican crude beginning in 2023.