Ana Isabel Martinez, Adriana Barrera

MEXICO CITY/HOUSTON – A long-term supply contract will be signed by Royal Dutch Shell on Thursday, as part the acquisition of Deer Park’s Texas refinery. According to a document and those familiar with it.

Pemex and Shell announced in May the deal, worth close to $600million. The Mexican firm will become the exclusive owner of the Houston-area refinery. This facility can handle 340,000 barrels per hour (bpd).

According to Reuters and a source, Shell will supply the foreign crude oil at a rate of around 200,000 bpd for 15 years. Pemex expects to provide Mexican crude oil to refinery at 115,000 bpd and to receive around 230,000 bpd in refined products. These could be sent to Mexico.

Pemex agreed separately to supply feedstocks to the Shell Chemical plant adjacent, according one source.

One source said that Octavio Romero, the chief executive officer of Pemex, is in Deer Park to witness the handover. Pemex was granted a labor contract that allowed it to take over most of the employees from the refinery. The document and source said this.

According to one person, “The official event will be held at approximately noon Thursday in Texas.” The Thursday handover was confirmed by a Shell spokesperson, but he couldn’t immediately speak to other terms.

Pemex has not responded to Reuters’s request for comment about the handover.

Mexico will be able to produce more gasoline and diesel by purchasing a refinery. Pemex saw a decline in fuel production between 2016-2020, and the refineries operated at half of their capacities that year. Deer Park however ran at 78% capacity in 2020.

Mexico executed the transaction in accordance with the agreement. Mexico received $596 million to purchase the refinery’s assets, equivalent to Shell’s 50% share in its debt. Also, Pemex was able liquidate the $596 million Pemex held in the refinery.