Shell Refinery Employees Will Be Offered Pemex Jobs Under Texas Deal

A unit of Pemex will become the sole owner of a Houston-area refinery under a deal announced by Shell (NYSE: RDS.A) on Monday.

Shell Oil Co. has reached an agreement to sell its 50.005% interest in Deer Park Refining Limited Partnership to its joint venture partner P.M.I. Norteamerica, S.A. De C.V., Shell reported in a written statement emailed to Rigzone. The seller added that the $596 million transaction – a mix of cash and debt, plus the value of hydrocarbon inventory – awaits regulatory approvals. It noted the current estimated inventory value ranges from $250 million to $350 million.

“Shell did not plan to market its interest in the Deer Park refinery; however, following an unsolicited offer from Pemex, we have reached an agreement to transfer our interest in the partnership to them,” commented Shell Downstream Director Huibert Vigeveno. “Pemex has been our strong and active partner at the Deer Park Refinery for nearly 30 years, and we will continue to work with them in an integrated way, including through our on-site chemicals facility, which Shell will retain.”

According to Shell, the deal will enable the company to “focus its refining footprint while also maintaining integration optionality and retaining value through its Chemicals and Trading activities.” Moreover, the company pointed out that Deer Park employees will be assigned to either the refinery or chemical plant assets. It explained that refinery personnel will be offered employment by Pemex and chemical plant personnel remaining with Shell.

Shell also noted that Pemex will recognize the United Steelworkers and adopt the collective bargaining agreement with the union.

“Above all, we remain committed to the wellbeing of our employees and will work closely with Pemex to ensure the continued prioritization of safe operations,” remarked Vigeveno. “We’re proud of our 90-plus year history as an operator and neighbor at Deer Park and we will continue to play an active role in the community.”

The Deer Park Refinery boasts a crude oil capacity of 340,000 barrels per day, and it processes crudes from Mexico, Canada, the United States, Africa, and South America, noted Shell. The company added that products from the facility include gasoline, aviation fuels, diesel fuels, ship fuel, and petroleum coke.

Shell expects the transaction to close in the fourth quarter of this year.

To contact the author, email mveazey@rigzone.com.