Mexico’s Pemex secures $500m in new funding to help it take over Texas refinery

The acquisition would secure critical fuel supplies for the state oil company

Mexico's state oil company Pemex plans to acquire Royal Dutch Shell’s Deer Park refinery in Texas. Reuters

Barclays, SMBC and Banorte are providing a $500 million bridge loan to Petroleos Mexicanos to help finance its takeover of Royal Dutch Shell’s Deer Park refinery in Texas.

The commercial bank bridge loan will help cover the total purchase cost of $1.6 billion, a sum that includes refinery assets, inventories and debts, according to people familiar with the situation who asked to remain anonymous because the information is not public.

The other $1.1bn will be allocated to Pemex, as the state oil company is known, from Mexico’s National Infrastructure Fund, Fonadin, according to documents seen by Bloomberg.

A spokesman for Pemex did not immediately respond to a request for comment. Banorte and Barclays declined to comment.

SMBC did not immediately return multiple requests for comment sent outside normal business hours.

The takeover comes as Mexico's President Andres Manuel Lopez Obrador seeks to increase state control of the country’s energy markets, boost Pemex’s reserves, and expand its refining capacity. Pemex’s acquisition of the Houston Ship Channel refinery would secure critical fuel supplies for the state oil company.

But the purchase could also strain Pemex’s finances, which are so dismal the government recently announced it would inject billions of dollars into the company. Pemex had $113bn of debt at the end of the third quarter, more than any other oil producer in the world.