PEMEX Cancels Vitol Contracts Following Corruption ScandalBy Cas Biekmann | Wed, 09/15/2021 - 17:46
PEMEX cancelled several Vitol contracts, as the NOC could see its tax burden further reduced as a part of a governmental bid to facilitate its rescue. In other news, Carlos Slim wins a major contract and oil production continues to suffer due to hurricane Ida. Read this and more in the weekly roundup!
Reuters reported that PEMEX has cancelled three contracts with Vitol. The cancellations, involving contracts for butane gas, naphtha and propane gas, represent the latest damage due to a US bribery case involving the energy trader. Mexico’s government had stated earlier this year it meant to renegotiate contracts with Vitol, saying it would get rid of unfavorable and crooked agreements.
The latest tax law proposal sent to congress contemplates an eventual reduction of 14 percentage points in the amount of income taxed from PEMEX’s upstream activities. According to a statement sent to congress by SHCP, “this proposal will allow the NOC to generate a structural change in its tax burden and thus liberate the resources that it needs in a permanent fashion, making the financial positions for both PEMEX and the federal government more robust in the medium to long term.”
Carlos Slim’s very own conglomerate Grupo Carso, through subsidiaries, obtained a US$196 million PEMEX contract for infrastructure operations. This contract for a “turnkey work to drill and complete development wells for onshore PEP fields” contributes to Slim’s increasing relationship with the federal government.
CFE aims to build alternative pipeline branches so that it can continue to develop halted natural gas projects, reported NGI. The routes in question are considered for the Guaymas-El Oro and Tuxpan-Tula pipeline projects.
Hurricane Ida’s damage to the Gulf of Mexico´s oil production continues to be a problem, as companies struggle to restart operations and close to half of operations have not restarted.
Following Ida, only a handful of oil companies were able to re-start online production levels nearing 200,000 barrels a day. Nonetheless, up to two-thirds of offshore operations and about half of crude output remain shut down following the hurricane´s disasters, according to data released by the United States Bureau of Safety and Environmental Protection.
Tropical storm Nicholas’ looming threat over oil production and prices in the Gulf of Mexico is increasing as it makes its way into the region. On Tuesday, oil prices took a tick upwards, a six-week high. West Texas Intermediate (WTI) crude is selling for a session high of US$74.28, while Brent crude did for US$74.06. Both mixes are trading at their highest since early August.
Days after hurricane Ida, the US Energy Information Administration (EIA) raised Q4 Henry Hub spot gas price forecast to US$4.00/MMBtu. Then, just yesterday, in anticipation of tropical storm Nicholas NGI’s spot gas national average spiked US$0.36 cents to US$5.225/MMBtu. By this standard, natural gas prices are up 117.6 percent in the year-to-date outpacing oil and other major commodities.