Page 5 - LatAmOil Week 48 2021

LatAmOil COMMENTARY LatAmOil

It is also a disappointment for Pemex, as CFIUS politician to have expressed concern about
represents the last step in the process of gaining Mexican energy policy recently. On Novem-
full US regulatory approval for the deal. The ber 3, for example, 40 US lawmakers said in a
Mexican NOC already owns 49.99% of the Deer letter to President Joe Biden that they believed
Park plant, and it is eager to increase its stake to that the Lopez Obrador administration’s efforts
100% and secure additional fuel supplies. to ensure Pemex’s advantage over any and all
It is also occurring against a backdrop of competitors violated the terms of the US-Mex-
criticism of the deal by US Representative Brian ico-Canada Agreement (USMCA) on trade,
Babin, a Republican from Texas whose district which was signed in 2020.
includes Deer Park. Babin said on November 30, “The overwhelming list of discriminatory
the same day that Shell announced the delay in actions [against US firms] has long passed the
CFIUS approval, that he believed the US govern- point of ‘merely’ raising serious questions,” they
ment ought to block the sale. said. “They actually suggest that the Mexican
The lawmaker said in a statement that government is proactively attempting to enact
his opposition to the proposed transaction policies and take actions that violate and under- CFIUS represents
stemmed partly from the fact that Pemex’s mine the treaty. Recent reports of discrimina- the last step
operational, technical and financial capabilities tory actions against US companies require a
lagged behind those of Shell. “Pemex lacks the timely and clear response.” in gaining full
technical expertise, safety record and business Then on November 17, Texas Governor Greg
practices needed to operate a facility of such Abbott said in his own letter to Biden that he was US regulatory
scale in the United States,” he commented. alarmed by reports that the Mexican govern-
He also drew attention to the current Mex- ment had used members of the national guard approval for the
ican government’s practice of employing every to shut down a fuel storage terminal in Tuxpan Deer Park oil
available means within the bounds of law to owned by Monterra Energy, a privately owned
ensure that Pemex dominates the domestic US firm, following the latter’s alleged failure to refinery sale
oil and petroleum product sectors. This strat- produce required documentation during the
egy, which has been spearheaded by President course of an audit. In the letter, Abbott urged the
Andres Manuel Lopez Obrador (widely known president to “take action to protect American
as AMLO), has harmed the interests of US busi- assets from seizure by the Mexican government.”
nesses, he stated. “Allowing a foreign company
run by an administration that is hostile toward Potential for nepotism
American energy producers access to our crit- Then on November 22, George Baker, the pub-
ical infrastructure endangers my constituents lisher of the Mexico Energy Intelligence newslet-
and threatens our national security,” he declared. ter, wrote in an article for the Houston Chronicle
that he had reservations about the deal for many
Republican critiques reasons. He cited many of the same issues men-
In some respects, Babin’s complaints are nothing tioned by Babin, Abbott and other Republican
new. The US lawmaker has been opposed to the figures, but he also pointed out the potential for
deal ever since it was announced in May 2021. In nepotism and corruption.
June, he sent a letter to the US Treasury Depart- “AMLO has a record of hands-on involve-
ment and the Department of Energy (DoE) urg- ment in executive appointments and pro-
ing a review of the proposed sale. curement,” he commented, referring to Lopez
He also delivered a similar critique of the Obrador by his nickname. “Marcos Herrería, the
Mexican NOC’s capabilities. “Simply put, Pemex number two executive in Pemex, is an in-law of
does not have the executive, managerial or the president. It would be naïve to suppose that
technical expertise to operate this state-of-the- AMLO would not appoint his people to jobs in
art facility safely,” he wrote in the letter. “This Deer Park and replace local contractors with his
proposed sale greatly increases the risks of an favourites.”
industrial accident, serious local environmental These critiques are not likely to drive CFIUS’
degradation and damage to our local economy final decision, given that most of them are com-
thanks to poor corporate management. Unfor- ing from members of a political party that does
tunately, Pemex has a problematic track record not currently hold the presidency. Nevertheless,
when dealing with US businesses and has a his- they may very well cause the approval process to
tory of backing out of contracts, soliciting bribes take more time than previously anticipated. As
and playing dirty in corporate disputes.” such, Shell may not be able to finalise the sale of
However, Babin is not the only Republican Deer Park to Pemex by the end of this year. ™

(File Photo)

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