Page 7 - NorthAmOil Week 36 2021

NorthAmOil COMMENTARY NorthAmOil

Mexcian Energy
Minister Rocio Nahle
recently indicated that
she was not concerned
about the refinery’s
finances.

loss in 2020 because of the pandemic. As of May remarked: “Pemex would be buying the cement
2021, the refinery was carrying $980mn in debt, and steel of a business that has been unprofitable
he said. for three years.”
Shell, for its part, has not confirmed any esti-
mates of the Deer Park refinery’s debts. When Attack from another angle
contacted by Bloomberg in late August, the Meanwhile, finances are not the only source of
super-major said it would not disclose the finan- concern.
cial performance of individual assets. In June of this year, US Representative Brian
Babin, a Republican from Texas whose dis-
Nahle defends Pemex’s plan trict includes Deer Park, raised the alarm over
Mexico’s government appears to be shrugging Pemex’s planned takeover of Deer Park on safety
off concerns about Deer Park’s financial position. grounds. In a letter to the Committee on For-
Energy Minister Rocio Nahle recently indi- eign Investment in the United States (CFIUS),
cated that she was not concerned about the the division of the US Treasury Department
refinery. “No, it’s not losing” money, she told that has the authority to approve the sale, Babin
Bloomberg recently. “Pemex did an internal came out strongly against the deal.
and external business analysis with an external “Simply put, Pemex does not have the execu-
company and the results they presented are very tive, managerial or technical expertise to oper- Other observers
good.” ate this state-of-the-art facility safely,” he wrote.
Other observers have suggested, however, “This proposed sale greatly increases the risks have suggested,
that the purchase would not make business of an industrial accident, serious local environ- however, that
sense for Pemex. “It’s a purchase that makes mental degradation, and damage to our local
sense in terms of the objectives of Pemex economy thanks to poor corporate manage- the purchase
increasing ‘Mexican’ fuel production, and with ment. Unfortunately, Pemex has a problematic
it, achieving the political objective of the pres- track record when dealing with US businesses would not make
ident,” Gonzalo Monroy, the CEO of Mexico’s and has a history of backing out of contracts,
GMEC energy consultancy, told BNamericas in soliciting bribes, and playing dirty in corporate business sense
late August. “However, as a business, it’s a terri- disputes.” for Pemex.
ble strategy to expand position in a market that’s He added: “Our energy companies are
closing,” he said. required to follow the most stringent regula-
Likewise, George Baker, the managing direc- tions ensuring the protection of Americans and
tor of the Baker & Associates energy consul- the security of this vital industry, and I lack the
tancy, wrote in a recent edition of the Mexico confidence that Pemex can or even desires to
Energy Intelligence newsletter that the acquisi- meet these high expectations.”
tion of Deer Park was likely to flunk strategic, Thus far, CFIUS has not commented on the
economic and commercial tests, even if it was matter, and Shell is still expecting to proceed
in line with Lopez Obrador’s political goals. with the sale of its stake in the Deer Park refin-
Pointing to a study by Barclays investment bank ery to Pemex. Even so, Babin’s comments may
that put the refinery’s asset value at zero, he become another source of trouble for Pemex.™

Week 36 09•September•2021 www. NEWSBASE .com P7