The Deer Park sale to Pemex is is at a dead-end, as US authorities have toughened a review process arguing that it might affect national security, Reuters reported this Tuesday. As for now, there will be uncertainty on the closing date of the transaction. According to sources, it could happen in a week or early 2022.
Firstly, as we reported previously, the Mexican state-owned company Petroleos Mexicanos, Pemex, announced in May the acquisition of the remaining 50% interest on the Deer Park refinery from Royal Dutch Shell in Texas.
Moreover, the transaction had a value of $596 million, in a combination of debt and cash; plus, the value of hydrocarbon inventory. The transaction would allow Shell to focus its refining footprint further; while also maintaining integration optionality and retaining value through its Chemicals and Trading activities.
On the other hand, the acquisition has a political value for Mexico; as President Andres Manuel Lopez Obrador pledged to drive the country to energy self-sufficiency by 2023. Indeed, Mexico has a deep dependence on foreign fuel imports. It buys around 70% of its fuel consumption from abroad.
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Deer Park sale to Pemex could threaten national security, says Congressman
As for now, the transaction has met a dead end, as the Committee on Foreign Investment in the United States (CFIUS) did not grant the final approval for the sale. A Shell spokesperson said. “While we were hopeful we could conclude the sale of the Deer Park refinery earlier in the CFIUS review process; we’re still targeting late 2021 as a closing date for the transfer.”
At the same time, a person close to Pemex said to Reuters that the closing date and the approval from the CFIUS could happen in mid-December. However, a person who works at Deer Park said there is no certain closing date. “Could be next week. It could be early next year,” the person said.
In addition, in July, the Texas Congressman and Republican party member Brian Babin asked the Biden administration to refuse the Deer Park Refinery sale to Pemex. He argued that Pemex lacked the technical expertise to operate the refinery; besides, he added that Pemex’s purchase would be a potential risk for the US.
Finally, on Tuesday, Mr. Babin raised his voice again against the sale, saying that. “Pemex lacks the technical expertise, safety record, and business practices needed to operate a facility of such scale in the United States.” In a statement, he also remarked. “Allowing a foreign company run by an administration that is hostile toward American energy producers access to our critical infrastructure endangers my constituents and threatens our national security.”
