After Plant Expropriation in Mexico, Air Liquide Says Compensation Talks Under Way

Mexico’s energy ministry announced the expropriation of the hydrogen plant at the Tula refinery, owned and operated by state oil company Pemex, on Feb. 8, citing the need to safeguard motor fuels production that it argued was threatened by the third-party supply of hydrogen.

Air Liquide, an industrial gases company, won a contract to supply hydrogen to the Tula facility in 2017.

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

On a call following the release of the company’s fourth-quarter earnings, Air Liquide CEO Francois Jackow confirmed that talks with Mexican officials were under way.

“We are indeed in discussions with the Mexican government to see how to address this issue,” said Jackow, adding that the talks were confidential.

“We have contracts which are extremely structured and which provide for compensation clauses in similar situations,” he added, without elaborating.

Mexico’s energy ministry did not immediately respond to a request for comment.

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

(Reporting by Augustin Turpin in Mexico City Additional reporting and writing by David Alire Garcia Editing by Matthew Lewis)