Mexico Orders Seizure of Hydrogen Plant at Pemex Oil Refinery

(Reuters) — Mexico's government has ordered the expropriation of a hydrogen plant at a Pemex oil refinery that was sold to French company Air Liquide during the previous administration, after officials ordered a temporary occupation of the facility last December.

The expropriation announcement from Mexico's energy ministry was published in the government's official gazette late on Thursday, citing risks to motor fuels production at the Tula refinery, owned and operated by state-run Pemex, due to the third-party supply of hydrogen.

RELATED: Mexico Orders Pemex to Occupy Privately-Operated Hydrogen Plant

Oil refineries use hydrogen to reduce the sulfur content in petroleum products, especially diesel.

The government's announcement also cited the need to ensure Mexico's "energy sovereignty" via the expropriation of the privately-operated facility.

Air Liquide, an industrial gases and services company, did not immediately respond to a request for comment.

The expropriation order noted that the firm has 15 days from its publication to present its response to the ministry's legal office.

Since he took office in late 2018, leftist President Andres Manuel Lopez Obrador has sought to concentrate more control over the country's energy sector in the hands of Pemex as well as state electricity company CFE.

He has also made domestic production of gasoline and diesel a top priority, arguing against Mexico's longstanding dependence on foreign imports.

Under his predecessor, centrist former President Enrique Pena Nieto, Pemex's refining arm signed a 20-year contract with Air Liquide in 2017 to supply hydrogen for Tula's operations in a bid to lower costs and boost efficiency.

The Tula facility, located in central Hidalgo state north of the Mexican capital, is Pemex's second-largest refinery currently in operation.

When the temporary occupation of the Air Liquide plant was ordered in December, the government said Pemex should compensate the French firm, but the latest order did not mention any payment.

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