PEMEX Buys New Refinery

President López Obrador announced that PEMEX bought Shell’s 50 percent ownership stake of the Houston-based Deer Park refinery. 

PEMEX had already owned half of the refinery. The president said PEMEX “bought a new refinery.” The purchase was valued at US$600 million. According to the president, Deer Park has the capacity to process 340,000 barrels of crude a day into fuel and diesel. The Deer Park refinery is supposed to have the same capacity as the refinery being built in Dos Bocas. The president said this purchase was made without issuing additional debt but through PEMEX’s available investment capital. PEMEX Director General Octavio Romero Oropeza said the decision to purchase the refinery was made back in August 2020. Romero Oropeza estimates that through this purchase and the future completion of the Dos Bocas refinery, along with the rehabilitation of Mexico’s existing refineries, the entirety of Mexico’s demand for fuels and other oil products will be covered by domestic production.  

Shell issued its own statement regarding the purchase, quoting their Downstream Director Huibert Vigeveno as saying that “Shell did not plan to market its interest in the Deer Park refinery; however, following an unsolicited offer from PEMEX, we have reached an agreement to transfer our interest in the partnership to them.” The statement also said that for the past 30 years PEMEX and Shell have worked together in Deer Park successfully, and that the refinery has a 90-year history. In addition, the refinery’s onsite chemical processing facilities will be retained by Shell. The IOC quotes the value of the sale at US$596 million, and also mentions the fact that the transaction is expected to come through at the end of the year. 

The Deer Park refinery currently processes crudes from Mexico, Canada, US, Africa and South America. Products produced by the refinery include gasoline, aviation fuels, diesel fuels, ship fuel and petroleum coke. The refinery’s hydrocarbon inventory will be valued at closing based on actual volumes and prevailing market prices. The current value of the hydrocarbon inventory would range from $250 to $350 million in cash considering current market prices and historic inventory volumes under normal operating conditions. Shell’s statements also sought to make clear that this purchase did not represent a strategy of divestment from the US for Shell.