Petróleos Mexicanos (Pemex) subsidiary Pemex Transformación Industrial (PTI) Norteamérica SA de CV has completed a deal with former 50-50 joint venture partner Shell PLC subsidiary Shell Oil Co. to acquire full ownership of Shell Deer Park Refining LP’s 340,000-b/d refinery in Deer Park, Tex. (OGJ Online, May 27, 2021).
As part of the transaction approved by the US Committee on Foreign Investment in late 2021 and finalized on Jan. 20, Pemex purchased the entirety of Shell’s 50.005% interest in the JV for $596 million, plus an additional payment of $325 million to cover hydrocarbon inventory to be valued at the end of January in an estimated range of $300-350 million, Shell and Pemex said in separate releases.
Alongside Pemex’s offer of continued employment to existing refinery employees, Pemex and Shell have entered into certain product offtake and crude supply agreements for Pemex’s now 100%-owned refinery.
The parties also previously agreed to maintain integration and close collaboration between the refining complex and Shell Chemical LP’s Deer Park chemical plant—which Shell will continue to own and operate—to capture synergies and economies of scale for both sites.
Pemex—which held a 49.995% interest in the Deer Park JV since 1993—said full ownership of the Deer Park refinery will enable the state-run operator to help supply the fuels Mexico requires to achieve self-sufficiency in line with Mexican President Andrés Manuel López Obrador business policy to advance the country’s national oil industry, as well as ensure its energy independence and security (OGJ Online, Oct. 19, 2020).
Fully funded by Mexico’s federal Fondo Nacional de Infraestructura (Fonadin), Pemex’s purchase of the Deer Park refining assets required no accrual of additional public debt.
Alongside ongoing construction of the grassroots 340,000-b/d Dos Bocas refinery at Paraíso, Tabasco, Mexico’s other domestic efforts to meet the country’s rising fuel demand also include completion of rehabilitation programs at Pemex’s existing six refineries by yearend 2023 (OGJ Online, Feb. 1, 2021).
Shell’s downstream evolution
Shell said sale of its interest in the Deer Park refinery comes as part of its Powering Progress strategy to reduce the production of traditional fuels by 55% by 2030 and accelerate the operator’s transition by 2050 to net-zero emissions. A cornerstone of the strategy includes the operator’s plan to consolidate its refinery footprint to five core energy and chemicals parks that maximize integration benefits of conventional fuels and chemicals production while also offering new low-carbon fuels and performance chemicals.
Shell’s remaining refining assets will include:
- Former Shell Deutschland Oil GMBH’s 140,000-b/d refinery at Wesseling, Germany, and former Godorf refinery near Cologne-Godorf, that form its 325,000-b/d integrated Rheinland refinery, which by 2025 the operator is transforming into Shell Energy and Chemicals Park Rheinland for production of renewable fuels and hydrogen.
- Shell Nederland Raffinaderij BV’s 405,000-b/d Pernis refinery and integrated petrochemical production site in Rotterdam, the Netherlands, which by 2024 the operator is transforming into an 820,000-tonnes/year biofuels refinery for production of sustainable aviation fuel (SAF) and renewable diesel made from waste (OGJ Online, Oct. 19, 2021).
- Shell Singapore’s 463,000-b/d integrated Pulau Bukom refinery on Bukom Island, Singapore.
- Shell Scotford’s integrated 92,000-b/d refinery and chemicals plant near Edmonton, Alta.
- Equilon Enterprises LLC (dba Shell Oil Products US)’s 229,000-b/d refining and petrochemical complex in Norco, La.
The remaining sites also will offer future potential hubs for carbon capture and sequestration (CCS), according to the company.