
U.S. approves sale of Shell stake in Deer Park refinery to Pemex
The Committee on Foreign Investment in the United States (CFIUS), an interagency committee authorized to review certain transactions involving foreign investment in the United States and certain real estate transactions by foreign persons, has approved the acquisition of Shell Oil Company’s stake in the Deer Park refinery by Petróleos Mexicanos (Pemex).
The financial transaction will be formally closed in January 2022, according to Octavio Romero Oropeza, CEO of Pemex.
Located on the Houston Ship Channel in the Houston–Sugar Land–Baytown metropolitan area, the Deer Park refinery has been operated since 1993 as a 50-50 joint venture between Shell Oil Company and P.M.I. Norteamerica, S.A. De C.V., a subsidiary of Petroleos Mexicanos.
Construction of the Deer Park refinery began in 1929, on an 800-acre site, and has expanded several times over the years. Construction of the petrochemical facilities began in 1940. Today, the facility encompasses 2,300 acres and employs 1,500 Shell employees, and 1,200 contract employees. Shell Deer Park currently includes the refinery, Shell Deer Park Chemical Plant and Deer Park Refining Limited Partnership.
The refinery is located near an abundant supply of light crudes in Texas. Deer Park has the capacity to process 340,000 barrels per day (bpd) of crude oil. The refinery’s output includes about 131,000 bpd of gasoline and components, 89,000 bpd of diesel fuel, 21,000 bpd of jet fuel, and 61,000 bpd of other products. It does not produce fuel oil.
Shell did not plan to sell its interest in the Deer Park refinery but received an unsolicited offer from Pemex. Pemex and Shell reached an agreement for the sale of Shell´s 50.005% interest in Deer Park Refining Limited Partnership in May 2021. The transaction will transfer full ownership of the refinery to Pemex.
The value of the transaction for the refinery’s assets is USD596 million, which is equivalent to 50% of the refinery’s debt (Shell’s stake in the company). The existing debt for the USD596 million corresponding to 50% of the participation of Pemex will be liquidated. The resources for the refinery’s operation will come from Mexico’s National Infrastructure Fund (FONADIN).
With the acquisition of Shell’s stake in Deer Park, and the rehabilitation of its five existing refineries in Mexico—Salamanca, Tula, Nuevo León, Minatitlán, and Santa Cruz—and a new refinery in Dos Bocas, “we are increasing our refining capacity and processing all of our raw material, which will mean producing all our fuels in Mexico,” the President of Mexico, Andrés Manuel López Obrador, said.
Shell Chemical L.P. will continue to operate its 100% owned Deer Park Chemicals facility located adjacent to the site. Employees assigned to the refinery will be offered employment by Pemex, while employees assigned to the chemical plant will continue employment with Shell. Pemex will recognize the United Steel Workers and adopt the Collective Bargaining Agreement.