Page 7 - NorthAmOil Week 36 2021
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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
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