Image credits: Carlos Valenzuela
News Article

PEMEX In Talks To Resume Business With Vitol

By Conal Quinn | Wed, 08/10/2022 - 19:43


A Reuters-exclusive report suggests that talks are advancing between PEMEX and global energy trader Vitol with an eye on resuming their business arrangement, which broke down last year in the aftermath of a high-profile bribery scandal. The prospect of a return to business as usual comes after the Dutch energy giant handed over the names of the corrupt officials who received the bribes. 

In March 2021, PEMEX suspended all commercial activity with Vitol, before canceling all three major contracts for the supply of naphtha, butane and propane gas as the US Department of Justice launched a corruption investigation into Vitol Americas, the Houston-based subsidiary of the Dutch company. This would be the first chapter of an extensive corruption scandal spanning several states in North and South America, including Brazil, Ecuador and Mexico. In each country, the same pattern of illicit dealings was observed: Vitol executives would bribe prominent officials in exchange for exclusive contracts with state oil companies.

As MBN reported in May, President López Obrador celebrated what he viewed as “the moral choice” prevailing when after a 17-month delay, Vitol eventually agreed to hand over the information the Mexican government needed to get to the bottom of the scandal. Insiders feel that the pressure put on the company by the current administration, particularly the threats that they would not be welcome to conduct business in the country anymore, proved decisive. In the US, for example, Vitol only reached an economic settlement to resolve the bribery charges.

At the end of 2020, the American subsidiary of the Dutch energy giant, Vitol Americas, admitted publicly in a New York courtroom that it had employed bribes and other schemes to secure contracts from the various state-owned oil companies in Latin America between 2015 and 2020. Following the admission, Vitol’s Houston-based subsidiary agreed to pay US$164 million in damages to put an end to the investigations by the US justice system. The agreement, however, did not include names or other transaction details.

Two unnamed PEMEX sources cited by Reuters suggest one obstacle that remains is the compensation to be agreed upon for the damages Vitol’s malpractice inflicted on the NOC. Just how much the Geneva-based company will have to pay out is yet to be defined. However, PEMEX CEO Octavio Romero released a statement in May detailing that the NOC had rejected an offer from Vitol including US$22 million in compensation as well as an understanding that Vitol would continue to carry out works on the Pajaritos ethanol terminal, free of charge. The US$164 million, settled on in New York as part of a deferred prosecution agreement, could also be an indicator of how much PEMEX can expect to receive.

The data used in this article was sourced from:  
Reuters, Energía Debate
Photo by:   Carlos Valenzuela
Conal Quinn Conal Quinn Journalist & Industry Analyst