Saturday, November 27, 2021
Home > BUSINESS > EXCLUSIVE Mexico’s Pemex cancels several Vitol contracts following transplant scandal

EXCLUSIVE Mexico’s Pemex cancels several Vitol contracts following transplant scandal

EXCLUSIVE Mexico’s Pemex cancels several Vitol contracts following transplant scandal

The logo of the Mexican state oil company Petroleos Mexicanos (Pemex) is pictured at a gas station in Ciudad Juarez, Mexico on February 27, 2020. REUTERS / Jose Luis Gonzalez

MEXICO CITY, September 15 (Reuters) – Mexican state oil company Petroleos Mexicanos (Pemex) has canceled three contracts with Vitol, the latest fallout from a US bribery case involving the world’s largest independent energy trader.

Three separate Pemex documents seen by Reuters and a source familiar with the case are the reason for the cancellation of Vitol’s public recognition in December in an agreement with the US Department of Justice that it paid the rebate to win business with the Mexican state-owned oil company, as well as state-owned companies in Brazil and Ecuador.

Pemex’s decision has not previously been reported.

In letters to Vitol (VITOLV.UL), all dated within the last two months, Pemex (PEMX.UL) informed the energy dealer of the cancellation of a contract for butane gas, one for naphtha and one for propane gas. The propane contract included four separate agreements.

The world’s largest independent commodity traders face global scrutiny for alleged corruption following years of investigations into bribery of government officials in several Latin American countries.

In March, Reuters reported that Mexico was looking to renegotiate some of its hundreds of millions of dollars in contracts with the Geneva-based company. Pemex CEO Octavio Romero Oropeza said it would spray terms that it considered unfavorable. Read more

Vitol confirmed that talks with Pemex to date had not reached a final result, but did not address whether contracts had been canceled.

In a statement to Reuters, the company said that in the wake of the corruption scandal, it had taken responsibility for its actions and acknowledged the state oil company’s concerns.

“Vitol acknowledged Pemex’s concerns, and over several months senior officials at both Vitol and Pemex sought to negotiate a decision that was acceptable to both parties. Although the discussions did not lead to an agreement between the companies, Vitol remains open to continuing the dialogue with Pemex. officials and working towards a mutually beneficial solution, “said Vitol.

The office of Pemex and President Andres Manuel Lopez Obrador did not respond to a request for comment on this story.

The source, who knows the negotiations, said the canceled contracts totaled millions of dollars and were all valid until at least 2023. Reuters could not determine their exact value.

The source said Pemex officials had pulled the plug on contract negotiations after Vitol officials denied their proposed changes to the terms.

Reuters could not determine the terms in question or the size of Vitol’s business in Mexico, as the supply contracts are not public. Mexico is the fourth largest importer of refined oil.

Several requests for Mexico’s contracts with Vitol and other energy traders under the Freedom of Information Act were rejected.

TAX ERROR

In December, Houston-based Vitol Americas agreed to pay $ 164 million to US and Brazilian authorities after admitting it bribed officials in Mexico, Brazil and Ecuador between 2015 and 2020 to get business with state-owned oil companies there.

In July, Reuters also reported that Pemex’s commercial arm PMI had temporarily banned new business with Trafigura (TRAFGF.UL), the world’s second-largest oil retailer after Vitol, as investigations into the behavior of major energy retailers in several countries deepened.

An internal PMI memo to staff dated July, which was seen by Reuters, gave no reason for the ban. Trafigura said Sunday that its “compliance policies and procedures have been fully reviewed and found by an independent external attorney to meet the highest standards of compliance required by law in all jurisdictions in which Trafigura operates.”

Some Mexican energy market sources questioned how Pemex would be able to procure some of its refined products with both Vitol and Trafigura at least partially banned, although others said the seriousness of the problem was not yet clear.

Ramses Pech, a Mexican energy expert, said Pemex could fall back on other energy traders like Valero or ExxonMobil.

“But that would depend on the amount and timing of contracts,” he said. “It would also need companies that have the necessary infrastructure for production, logistics and storage in the United States and Mexico.”

ExxonMobil declined to comment, Valero did not respond to a request for comment.

Last month, Mexico’s tax chief told Reuters that the government is investigating Vitol over “irregularities” in the documentation of its refined oil products entering Mexico, which could lead to criminal charges of tax evasion. Read more

Vitol denied any wrongdoing. It said the allegations date back to a few years and are related to imports classified by another company it worked with.

Reporting by Stefanie Eschenbacher Further reporting by Ana Isabel Martinez in Mexico City, Julia Payne in London and Erwin Seba and Sabrina Valle in Houston Editing by Daniel Flynn and Alistair Bell

Our standards: Thomson Reuters trust principles.

.

Leave a Reply

Your email address will not be published. Required fields are marked *