AI Air Liquide SA

The Mexican government on Friday ordered Pemex to take over Air Liquide's hydrogen plant at the state-owned oil company's Tula refinery in Hidalgo state as part of its push to become self-sufficient in fuel production.

President Andres Manuel Lopez Obrador ordered Pemex's refining subsidiary TRI to take control of the facility, calling hydrogen supply for the refinery "a matter of public interest."

The government published the decree on Tuesday.

"To achieve the federal government's objective of reaching energy sovereignty through self-sufficiency in the production of refined products, it's necessary to have autonomy in hydrogen supply at the Tula refinery without depending on external parties," the government said in its decree.

Under former President Enrique Pena Nieto's administration, Pemex signed a nearly $53 million deal with French firm Air Liquide to supply hydrogen to the Tula refinery.

Mexico depends on third parties for hydrogen supply, something the government said was putting domestic gasoline and diesel production at risk. The government also said its deal with Air Liquide was not economically viable for Pemex.

According to the decree, Pemex will compensate Air Liquide for the hydrogen plant based on an appraisal from the Institute of Administration and Appraisal of National Assets.

Pemex Chief Executive Octavio Romero in 2021 said Lopez Obrador had ordered the company to open negotiations to buy back hydrogen plants at the company's Tula, Madero and Cadereyta refineries that were sold during previous administrations.

Romero said the Lopez Obrador administration managed to cancel the sale of Cadereyta, but Pemex continued to pay a lot to lease back the facilities Pemex did not immediately respond to a request for comment to OPIS.

An Air Liquide spokesperson on Tuesday said the company's legal team is analyzing the impacts of the decree and stressed that the action is not an expropriation.

The Mexican government last year attempted to take control of a privately owned railway line in southern Mexico operated by Grupo Mexico, but later reached an agreement with the company.

This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.

--Reporting by Karla Omaña; karla.omana@opsinet.com; Editing by Jeff Barber, jbarber@opisnet.com

(END) Dow Jones Newswires

January 02, 2024 16:04 ET (21:04 GMT)

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