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News Article

Deer Park to Be Paid For in Full by January

By Pedro Alcalá | Tue, 12/28/2021 - 14:29

President López Obrador announced today that PEMEX’s purchase of Shell’s Deer Park refinery will be concluded by the end of January, after explaining that all credit lines involved in the purchase have been correctly accounted for. This comes after the announcement earlier this month that the sale of the refinery would have to be delayed past its 2021 deadline, which could not be met due to additional requirements imposed by US public authorities. “All pertinent information, including the sourcing of all the resources required to pay for the refinery, has been submitted to the appropriate US authorities,” said the president. 

Shell is yet to make a statement regarding this new target date; its last statement simply made clear that a review of the deal by the Committee on Foreign Investment in the US, a group of legislators focused on national security and chaired by the US Treasury, had been expected to wrap up in December but has been extended into next year, according to Shell spokesperson Curtis Smith.

Obstacles standing in the way of fulfilling this new deadline include Bloomberg’s claim from earlier this month that the all of the credit lines that PEMEX was utilizing for the purchase of Deer Park actually totaled US$1.6 billion in available funds, almost triple the originally announced price tag of US$596 million. Bloomberg speculated that these funds were made available to pay for whatever the operational debt of the refinery might turn out to be, a number that has fluctuated according to different statements and balance sheets from both PEMEX and Shell.

Another possible interference in the finalization of this purchase is a lawsuit that was filed last week by a pair of New York businessmen on the grounds that the purchase would raise US gas prices. Specifically, they allege that the sale of Deer Park to PEMEX would lead to "substantially less competition" in gasoline, "significantly increasing" the plaintiffs' energy costs. With this in mind, they asked the Houston court in which the lawsuit was filed to block the purchase permanently or force PEMEX to divest its holdings. A report by Reuters identified the lawsuit’s plaintiffs as Aaron Hagele and Andrew Sarcinella, owners of a Mt. Vernon, New York, coin-operated laundromat who claim that their business would suffer "an incalculable but evident" impact if more of Deer Park's output is exported. Their attorney, Mark Lavery, told Reuters that Deer Park provides up to 2.5 percent of US gasoline and “higher exports would reduce competition and lead to increased prices.”

The data used in this article was sourced from:  
MBN, Forbes, Bloomberg, Reuters
Photo by:   SENER
Pedro Alcalá Pedro Alcalá Senior Journalist & Industry Analyst