Latin America Advisor

Energy Advisor

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Is Pemex Making a Smart Move by Buying Deer Park?

Pemex’s plan to buy the Deer Park Refinery outside Houston is part of Mexican President Andrés Manuel López Obrador’s “quaint vision of self-sufficiency,” David Shields, a critic of the plan, says below. // File Photo: Shell..

Mexico’s Pemex will take control of the Deer Park refinery near Houston on Jan. 20, Reuters reported last week. The U.S. government authorized the state oil company’s purchase of the refinery from Royal Dutch Shell last month, a development that Mexican President Andrés Manuel López Obrador called “very good news.” Pemex’s bid to purchase the more than 50 percent it does not already own in the refinery for nearly $600 million was announced in May. Why has López Obrador been so motivated to see the Deer Park refinery sale close? Is it a good strategic play for Mexico and its debt-laden state oil company? Are the concerns of U.S. consumers over higher prices and those of national security valid?

Fluvio Ruíz Alarcón, Mexico-based oil and gas analyst: “The purchase of ‘the other half’ of Deer Park cannot be seen in isolation: it is clearly part of a set of investment projects and legal reforms that seeks to guarantee Mexico’s energy security by way of supporting Pemex’s presence in the national fuel market. It is a complement to both the reforms made to the Hydrocarbons Law last year, as well as the Tula refinery reconfiguration projects and the construction of the Dos Bocas refinery. Thus, the fuel production of Deer Park (110,000 barrels of gasoline, 90,000 barrels of diesel and 25,000 barrels of jet fuel) that is sold today as freely determined by Shell, will surely be destined for Mexico. For comparison, Dos Bocas would produce some 175,000 barrels per day of gasoline and 127,000 barrels per day of diesel. With regard to risk, the main one could be the lack of coherence in oil policy as a whole—in particular…”

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A sister publication of the Inter-American Dialogue’s daily Latin America Advisor, the weekly Energy Advisor captures fresh analysis from business leaders and government officials on the most important developments in oil and gas, biofuels, the power sector, renewables, new technologies, and the policy debates shaping the future of energy in the Western Hemisphere and beyond. To subscribe or for more information, contact Erik Brand, publisher of the Advisor, at ebrand@thedialogue.org.


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Erik Brand

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E. ebrand@thedialogue.org

Gene Kuleta

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P. 202.463.2920
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