BASF Wins Dismissal of Pemex Stolen Gas Condensate Claims

BASF Corp. won’t face trial on claims it unknowingly bought stolen natural-gas condensate from a smuggling ring that Mexico’s national oil company has had trouble stopping on its side of the border.

A judge granted BASF summary judgment May 9 in a case that was set to go to trial in Houston federal court today.

Pemex Exploracion y Produccion, the state oil company’s exploration unit, started suing U.S. refiners in 1997, claiming they facilitated a black market in natural-gas liquids, even if the companies didn’t know they were buying from thieves.

Pemex said armed bandits stole more than $300 million in condensate from the Burgos field in northern Mexico starting in 2006, trucking much of it across the border in hijacked tankers. The smugglers have eluded Mexican army helicopters and troops summoned to defend the oilfields, according to court papers.

In addition to Florham Park, New Jersey-based BASF, Pemex sued Shell Chemical LP, Shell Trading U.S. Co. and ConocoPhillips (COP), among other U.S. refiners, on similar claims in a separate case in 2010, which remains pending.

U.S. District Judge Sim Lake in Houston, who presides over both stolen Mexican condensate cases, last September restricted the claims to sales made within two years of when Pemex filed suit in the U.S.

Lake also required Pemex to trace specific shipments of liquids to prove the accused U.S. firms took actual possession of stolen condensate.

The judge’s order dismissing the remaining claims against BASF said middlemen blended the stolen Mexican condensate with legitimate product in large U.S. storage tanks, making it impossible for buyers to know they were trading in stolen goods.

The case is Pemex v. BASF, 10-01997, U.S. District Court, Southern District of Texas (Houston).

To contact the reporter on this story: Laurel Calkins in Houston at lcalkins@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net Andrew Dunn, Peter Blumberg

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