Mexican state-owned oil company Pemex took full control of the 340,000 b/d Deer Park refinery in Texas from Shell today, marking the end of the Anglo-Dutch major’s near century-long ownership of the facility.
Under terms of a deal announced in May 2021, Pemex assumed the 50.005pc it did not already own in the facility from its longtime joint venture partner for $596mn, plus the cost of crude inventories, currently estimated around $325mn.
For Shell, the transaction signals the end of 92 years of ownership at the Deer Park facility 20 miles southeast of Houston, as well as its continued move away from North American oil and gas industries. For Pemex, ownership of the refinery — the 16th largest in the US in terms of crude processing capacity according to the company — is intended to herald the beginning of a new era of “energy independence” for Mexico.
As part of a plan to cease crude exports by 2024, Pemex envisions Deer Park as a key foothold into a US refinery that can take Mexican crude and send products back to Mexico. Pemex plans for Deer Park, its planned 340,000 b/d Olmeca refinery under construction in Dos Bocas, Tabasco, and six existing refineries to fully take up around 2mn b/d of crude from 2024. This would require an increase in refining capacity rates in the six existing refineries in Mexico from 44pc now to 86pc.
Pemex chief executive Octavio Romero Oropeza said today the company will work to maintain the facility’s “technical and administrative efficiency” in coming years. Pemex’s operational record faced some political scrutiny after the sale was announced last year, with congressman Brian Babin (R-Texas) telling Argus that the deal could lead to an “eye of fire” at Deer Park. The number of accidents at Pemex sites rose by 88pc year-over-year in the third quarter of 2021, with a fire at an offshore platform in the Gulf of Mexico and a rupture at an underwater gas pipeline that created a ring of fire in the ocean in July, among the more disruptive incidents.
While Mexican President Andres Manuel Lopez Obrador has repeatedly emphasized the deal’s implications for energy self-sufficiency, Shell will maintain some commercial interest in Deer Park’s operations. Shell has agreed to supply crude and offtake products from the refinery for an unspecified period, according to a statement today upon the deal’s closing.
Shell will also maintain complete control of the Deer Park chemicals facility and continue to provide emergency services at the refinery moving forward.