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Mexico Bans Vitol, Trafigura From Oil Trading With Pemex

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by Tyler Durden
Tuesday, Aug 24, 2021 - 12:46 PM

Authored by Charles Kennedy via OilPrice.com,

The Mexican government has banned commodity trading majors Vitol and Trafigura from doing business with state-owned oil and gas major Pemex on allegations of corruption, Bloomberg reported, citing Energy Minister Rocio Nahle.

In an interview for the news agency, Nahle said the ban will be in effect until the end of President Andres Manuel Lopez Obrador’s term. Other commodity traders are not safe, either, as the official said the government is reviewing their conduct, too.

“Those who are carrying out corruption shouldn’t be in Mexico,” Nahle told Bloomberg.

“We are working to leave a country with good practices.”

An Argus report, however, cited the energy ministry as saying no new formal bans on any commodity trading firms have been issued. The ministry added, however, that Pemex will only do business with companies that have not been accused of corruption.

Vitol was accused of corruption by U.S. and Mexican authorities. The company agreed to settle bribery allegations for the U.S., Mexico, and Brazil earlier this year, paying $164 million.

Trafigura has denied any wrongdoing and “strongly refutes any allegation or suggestion of corruption,” according to a spokesperson who spoke to Bloomberg. However, last month Pemex’s commercial arm suspended business with the Swiss firm amid investigations into allegations about corruption.

At the time, all other divisions within Pemex were allowed to continue doing business with Trafigura.

Corruption allegations aside, the move could also be seen as part of broader government efforts to restore Pemex as the chief player on the Mexican energy market, which have also included hefty tax relief and legislation against competitors.

The lower house of the Mexican parliament earlier this year passed a controversial piece of legislation that would remove a stipulation from an earlier law that requires the state energy market regulator CRE to prioritize fuel sales from private companies as a way of leveling their playing field with Pemex.

At the same time, the government has granted billions in tax relief to the state company, including $3.6 billion for this year alone. Additional support measures have included a reduction in Pemex’s profit-sharing obligations.

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