The Deer Park refinery sale to the Mexican state-owned company Petroleos Mexicanos (Pemex) has been approved by the US government; president Andres Manuel Lopez Obrador said this Wednesday.
Firstly, as we have reported previously, the sale was a matter of dispute. Some US Congressman considered selling Shell’s Deer Park refinery to Pemex threatened US national security.
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. 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.
Furthermore, back in late November, the Committee on Foreign Investment in the United States (CFIUS) denied the final approval for the sale. However, on Wednesday morning, the Mexican government said the CFIUS had finally approved the transaction.
Also recommended for you: Gran Tierra Energy completes redetermination of credit facility. Click here to read.
Deer Park refinery sale with terms unchanged
In addition, Pemex Chief Executive Officer Octavio Romero, speaking alongside president Obrador, said that it was excellent news. He also remarked. “The idea is to finalize the purchase during the first weeks of 2022.”
On the other hand, Lopez Obrador, who backed the purchase as part of a plan to make Mexico self-sufficient in gasoline; thanked US President Joe Biden for his support during the authorization process.
Also, CEO Romero said that the terms of the deal had not changed since May, and that Mexico would pay off the existing debt of both Shell and Pemex in the refinery, which he said amounted to around $1.2 billion in total.
Finally, Shell confirmed the CFIUS approval in a message to Deer Park refinery employees. “In the coming days, we will work on finalizing the closing date for the deal,” the oil refinery’s general manager, Guy Hackwell, told workers.
