Pemex Said to Hire Bank of America for Refinery Partner Search

  • Bank hired to find partners to reconfigure three refineries
  • Pemex also seeks consortium to operate Tula coker unit

Petroleos Mexicanos has hired Bank of America Corp. to help it find partners to improve operations and reconfigure its ailing refineries, said people with knowledge of the situation.

Pemex, which announced in June it was in talks with several banks to assist the company to find refining partners, has hired Bank of America to lead the search, according to the people. The state-owned producer hired an investment bank to seek joint ventures with private companies to reconfigure its Tula, Salamanca and Salina Cruz refineries, Carlos Murrieta, Director of Industrial Transformation, said in an interview Monday, without naming the bank.

"It was a process that started with about 12 banks involved, and in the end, one was selected," Murrieta said in an interview at the Pemex headquarters in Mexico City. "We are now working with them" to assist Pemex to "speak with various companies to gauge what they will be interested in," he said.

The hired bank will also assist Pemex to find partners to operate Tula refinery’s coker, which has been operating at minimum levels, according to Murrieta. Pemex is currently in talks with at least three consortium groups "very interested" in overseeing the execution, operation and completion of the unit, Murrieta said. The groups typically consist of a developer, a refiner to act as operator and a bank, Murrieta said.

A Bank of America spokesperson declined to comment. A Pemex press official said the company had no comment on the hiring of the bank.

"Biggest Project"

Locating a partner for the Tula coker unit is the "biggest and most significant" project for the company’s Industrial Transformation division, Murrieta said. Pemex expects to advance in partnership talks for the coker by the first quarter of 2017, and is not seeking sales-and-leaseback agreements as a viable contract structure, he said.

"We are looking for partners that can take risks," Murrieta said. "We don’t want a scheme with a guarantee that doesn’t allow us to take advantage of all the benefits of having a partner."

Pemex initiated talks with banks earlier this year to seek partners to improve operations at Pemex’s refineries, which incur annual operating loss of around $5 billion, Jose Antonio Gonzalez Anaya, Pemex’s Chief Executive Officer, said in June.

The company will spend $120 million in the final two months of the year to improve its refineries, which processed only 766,300 barrels a day in September, far below their 1.65 million-barrel capacity. Refinery processing is expected to increase to 1.1 million barrels per day by March or April as several plants under maintenance will be reactivated, Murrieta said.

— With assistance by Amy Stillman

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