Pemex, the Mexican state-owned company, Petroleos Mexicanos, has canceled three contracts with the world’s largest commodity trader, Vitol. The cancelation comes as Vitol faces scrutiny globally for its alleged payments and briberies in Latin America to win businesses.
As we reported previously, Vitol’s bribery scandal involved Pemex and Petroecuador. Then, in late March 2021, Pemex said it was looking to renegotiate contracts with Vitol. According to Reuters, Pemex’s decision to cancel the contracts came after Vitol officials refused Pemex’s proposed changes to terms.
Reuters also notes that contracts canceled involved one for butane gas, another for naphtha, and one for propane gas. This propane gas deal encompassed four separate deals. The value of the contracts canceled remains unknown. However, estimations pointed out to the hundreds of millions of dollars. Contracts were valid at least until 2023.
On the other hand, Reuters says in its exclusive report that Vitol has accepted its responsibility for its actions over the scandal and that it has acknowledged Pemex’s concerns. “Vitol acknowledged Pemex’s concerns, and over several months senior officials at both Vitol and Pemex sought to negotiate a resolution acceptable to both parties.” Vitol said.
The company also remarked. “Although the discussions did not lead to an agreement between the companies, Vitol remains open to continuing its dialogue with Pemex officials and working toward a mutually beneficial solution.”
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Pemex might fall back on Exxon and Valero for refined products
As we reported previously, after the bribery scandal that broke back in December, Vitol agreed to pay $164 million to the U.S. and Brazilian governments after admitting that it had bribed officials in Mexico to win juicy contracts between 2015 and 2020.
Moreover, president Andres Manuel Lopez Obrador said his government would conduct a thorough investigation on the matter; however, the results of such investigation have not been disclosed.
Furthermore, after the contract cancelations with Vitol, and the Trafigura ban from commercial relations with PMI Comercio Internacional, Pemex’s commercial arm; some Mexican energy market experts have questioned how Pemex will be able to source refined products. Ramses Pech, a Mexican energy expert, said Pemex could fall back on other energy traders like Valero or ExxonMobil.
Finally, he remarked. “But it would depend on the volume and time of contracts,” he said. “Also, it would need companies that have the infrastructure needed for production, logistics, and storage in the United States and Mexico.”
