Page 6 - NorthAmOil Week 48 2021

NorthAmOil COMMENTARY NorthAmOil

CFIUS delays Shell’s sale

of refinery to Pemex

The Deer Park refinery is not likely to be transferred to Mexico’s

NOC by the end of the year as anticipated

TEXAS-MEXICO SHELL Oil, a US-based subsidiary of Royal
Dutch Shell, said earlier this year that it was
WHAT: hoping to finalise the planned sale of its 50.01%
CFIUS did not approve the stake in the 302,800 barrel per day (bpd) Deer
Deer Park refinery sale Park refinery in Texas to a subsidiary of Mexico’s
as expected on November national oil company (NOC) Pemex in Decem-
29. ber of this year. However, the deal appears to
have encountered some last-minute obstacles.
WHY: On November 30, Shell said in a statement
Republican lawmakers in that a US federal inter-agency body, the Com-
the US have been critical mittee on Foreign Investment in the United
of the proposed sale. States (CFIUS), had delayed approval of its
agreement with Pemex’s P.M.I. Norteamerica
WHAT NEXT: subsidiary. The statement did not comment on
Pemex’s hopes of a brief the reasons for the delay or say when the sale
delay may not come to might move forward, but it quoted company
fruition. spokesman Curtis Smith as saying that Shell
was working with US authorities with the aim
of wrapping up the deal by the end of December.
“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 the same day that Shell announced the delay in
2021 as a closing date for the transfer of Shell’s CFIUS approval, that he believed the US govern-
interest in the refinery,” Smith commented. ment ought to block the sale.
According to one source with close ties to The lawmaker said in a statement that
Pemex, this optimism is well-founded. CFIUS his opposition to the proposed transaction
may approve the Deer Park deal in mid-Decem- stemmed partly from the fact that Pemex’s
ber, the source told Reuters earlier this week. operational, technical and financial capabilities
But another source who works at the refin- lagged behind those of Shell. “Pemex lacks the
ery was less upbeat. CFIUS approval “could be technical expertise, safety record and business
next week, could be early next year,” this source practices needed to operate a facility of such
remarked to the news agency. scale in the United States,” he commented.
He also drew attention to the current Mexi-
Local lawmaker’s opposition can government’s practice of employing every
This development is a setback for Shell, which available means within the bounds of law to
had expected to secure a green light for the sale, ensure that Pemex dominates the domestic
worth nearly $600mn, on November 29. It is oil and petroleum product sectors. This strat-
also a disappointment for Pemex, as CFIUS egy, which has been spearheaded by President
represents the last step in the process of gain- Andres Manuel Lopez Obrador (widely known
ing full US regulatory approval for the deal. The as AMLO), has harmed the interests of US busi-
Mexican NOC already owns 49.99% of the Deer nesses, he stated. “Allowing a foreign company
Park plant, and it is eager to increase its stake to run by an administration that is hostile toward
100% and secure additional petroleum product American energy producers access to our crit-
supplies. ical infrastructure endangers my constituents
It is also occurring against a backdrop of crit- and threatens our national security,” he declared.
icism of the deal by US Representative Brian
Babin, a Republican from Texas whose district Republican critiques
includes Deer Park. Babin said on November 30, In some respects, Babin’s complaints are nothing

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