The energy world is changing. Oil companies like Shell are looking to transition to renewable energy resources.
Mexico is buying Shell Oil's majority stake in a Deer Park refinery for nearly 600 million dollars. Shell and Pemex have run the refinery as a joint venture for almost 30 years. Industry analyst Phil Flynn, with PRICE Futures Group, says the move comes as oil and gas companies are facing a tough dilemma. On the one hand, many of them are looking to invest in renewable energy sources for the future. On the other hand, the use of fossil fuels isn’t going away anytime soon.
“I think this shows you that it’s not going to be as simple as a lot of people think to get off oil and gas,” Flynn said. “I think Shell is having it both ways. They’re going to continue to refine gasoline, but it’s not going to be on their neck, it’s going to be on Mexico, and Mexico is going to have to deal with the increased carbon footprint.”
Pemex, which is state-owned by Mexico, has pledged to operate the Deer Park refinery in an environmentally responsible way. The facility already refines Mexican crude oil. Flynn believes local workers are likely to remain in high demand. Another benefit for Mexico is that Deer Park can refine heavier crude without producing fuel oil as a by-product.