Exclusive-Pemex’s trading arm bans new business with Trafigura -sources By Reuters

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© Reuters. FILE PHOTO: A tanker truck carrying fuel is pictured along the roads on the way to a gas station in Mexico City, Mexico, Jan. 15, 2019. REUTERS / Henry Romero / file photo

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By Stefanie Eschenbacher and Julia Payne

MEXICO CITY / LONDON (Reuters) – The commercial arm of the Mexican state oil company Petroleos Mexicanos (Pemex) has temporarily banned new business with Trafigura AG, according to a document and a source, as investigations into the behavior of the energy trader in several countries are deepened.

The world’s largest independent commodity traders https://www.reuters.com/article/us-oil-corruption-traders-factbox-idUKKBN28E2RJ are under investigation for alleged corruption after years of investigations into bribes from public officials in several Latin American countries worldwide.

Pemex and other state-owned oil companies have become cautious about doing business with traders that include Trafigura and rival Vitol.

Earlier this month, PMI Comercio International suspended new business with Trafigura and its subsidiaries until further notice, according to Reuters. The document did not give a reason for the ban.

Mexico is the world’s fourth largest importer of refined oil products and a major buyer of liquefied natural gas (LNG). Many overseas trading houses and oil companies buy Mexican crude oil from Pemex and also supply refined products or LNG for Mexican state-owned companies.

PMI employees, who are responsible for Pemex’s fuel imports, have been told to honor existing agreements with Trafigura but not to start new business as of early July, a source familiar with the operations said.

Mexico’s longstanding business relationships with Trafigura and other energy traders have become increasingly difficult due to the gradual imposition of additional compliance levels by the company and its units, several sources said.

The main reason for the increased scrutiny is that Pemex and its subsidiaries are concerned about exposure to companies investigated for corruption elsewhere, two of the sources said.

All sources spoke on condition of anonymity because of the sensitivity of the matter.

Other Pemex entities continue to trade with the Geneva-based dealer, another source said. Reuters was unable to determine the frequency and scope of the trade relationship, but America accounted for 31% of Trafigura’s oil revenues in 2020.

“We see no basis for a suspension of new business with Trafigura and look forward to clarifying the situation with PMI as soon as possible,” said a spokeswoman for Trafigura, adding that the compliance standards have been reviewed by an independent external consultant .

Pemex did not immediately respond to a request for comment.

At least two cargoes of gasoline and naphtha shipped by Trafigura should arrive in Mexican ports this month, according to two sources with knowledge of the shipment, confirming that shipments purchased prior to the suspension decision were not canceled.

In addition, a contract between Trafigura and Mexican energy company Comision Federal de Electricidad for the supply of LNG to the country remains in effect, according to two different sources.

Trafigura’s two largest trading areas are oil and metals. The company traded around 6.4 million barrels of crude oil and refined products per day in the first half of this year, making it the largest oil trader after Vitol.

In 2018, Brazilian prosecutors announced an investigation into the alleged bribery involving traders Trafigura, Vitol and Glencore (OTC 🙂 and officials from the state-controlled company Petrobras.

Vitol, the largest commodities trader, agreed to pay $ 164 million to US and Brazilian authorities last year after admitting bribing officials in Mexico, Brazil and Ecuador to get business with state oil companies there and keep.

Ecuador’s state-owned company Petroecuador has removed Vitol and Gunvor from its supplier list since 2020 as part of the investigation.

President Andres Manuel Lopez Obrador reiterated in June that Mexico wanted Vitol to reveal the name of the official at the state oil company who accepted bribes from Vitol.

PMI temporarily banned Vitol trading in December. Mexico is trying to renegotiate some of its contracts with Vitol after the trader admitted to paying bribes to win deals. The ban remains in place, the source said.

source https://thedailytradingnews.com/exclusive-pemexs-trading-arm-bans-new-business-with-trafigura-sources-by-reuters/