By KELIN DILLON
Mexico’s state-owned oil company Petróleos Mexicanos (Pemex) announced its acquisition of the Deer Park refinery in Texas on Monday, May 24, for the sum of $596 million dollars for 50 percent of the shares from Shell Oil Company to complete the purchase, as Mexico already held the other half of the shares.
Part of Pemex’s acquisition from Shell will be paid in cash, while the rest will be carried over into debt and also another part through the purchase of Shell’s hydrocarbon inventory.
“Shell did not plan to commercialize its interest in the Deer Park refinery,” said Shell director Huibert Vigeveno, who also noted the company planned to scale back its participation in oil refinement.
“However, after an unsolicited offer from Pemex, we have reached an agreement to transfer our interest in the association to them.”
Deer Park cost 90 percent less than the currently under-construction Dos Bocas refinery in Tabasco, which is projected to cost at least $8.9 billion on completion, while both refineries have the capacity to refine the same amount of oil daily, at 340,000 barrels per day.
The Texas refinery likewise generates 110,000 barrels of gasoline, 90,000 barrels of diesel and 25,000 barrels of jet fuel per day.
In acquiring Deer Park, Pemex hopes to meet its goal of doubling its oil production from 2020, which was 691,000 barrels per day, to help supply the entire fuel demand of Mexico without having to import it from foreign countries.
Specialists in the oil sector agreed across the board it would have made more sense for Mexico to purchase already-built refineries capable of handling Mexican oil at a lower cost, like Deer Park, at the start, rather than spend 10 times that amount on building the project in Tabasco.
“It seems that it is a very good business compared to what a new refinery costs,” consultant David Madero told daily newspaper Reforma. “If the Deer Park refinery in operation is worth $1.2 billion (considering the investment of both partners), why are we going to spend $8 billion more in Dos Bocas? Does it make sense when Deer Park has the same refining capacity and when is it a refinery that is already fine-tuned to process Mexico’s crude oil?”
“From the beginning of the current administration, it was recommended that instead of building a refinery, one should be bought in the Gulf of Mexico, where all the necessary heavy crude refining capacity is already installed,” said energy expert Rosanety Barrios. “This leads to questioning the viability of Dos Bocas.”
However, with Deer Park’s reported losses of 2.87 billion pesos in 2019 due to maintenance, followed by 8.112 billion pesos in 2020, based on reduced demand from the covid-19 pandemic, it remains to be seen whether the new investment in the Texas refinery will help or hurt Pemex in reaching its goals for the country.