National security review stalls sale of Shell U.S. refinery to Mexican state oil firm

A national security review has delayed the sale of Royal Dutch Shell's controlling interest in a Texas refinery to Mexico's national oil company Petroleos Mexicanos (Pemex), Shell said on Tuesday.

Shell in May disclosed a sale of its 50% interest in the 302,800 bpd Deer Park, Texas, refinery outside Houston to partner Pemex for about $596 MM. The closing was expected as early as Wednesday.

Approval by the powerful federal Committee on Foreign Investment in the United States (CFIUS) is last hurdle to transfer full control of the Texas refinery to Pemex, said people familiar with the matter.

"While we were hopeful we could conclude the sale of the Deer Park refinery earlier in the CFIUS review process, we're still targeting late 2021 as a closing date for the transfer of Shell's interest in the refinery," said Shell spokesperson Curtis Smith.

Pemex did not immediately reply to a request for comment.

A spokesperson for CFIUS declined to comment.

"There's no new closing date," one of the people familiar with the matter said. "Could be next week. Could be early next year."

U.S. Representative Brian Babin, a Republican representing southeast Texas, in June said he had "significant concerns" about the deal and called upon U.S. Treasury and Energy departments to do a full review of the sale.

"This transaction creates a tangible public health and environmental risk to the Texas residents who work at and live in proximity to the Deer Park facility, as well as an economic risk to those with a stake in the financial well-being of the company," Babin wrote in a letter to two departments.

Babin said he was "not confident Pemex has the corporate wherewithal to operate such a facility in the United States," according to his June 21 letter to Treasury Secretary Janet Yellen and Energy Secretary Jennifer Granholm.

Under the sale agreement announced in May, Shell will retain control of its the Deer Park facility's chemical plant and the company will have only one refinery in the United States, the 230,611-bpd plant in Norco, Louisiana.

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