Bloomberg News

Pemex Can’t Add ConocoPhillips, Shell to Lawsuit Over Stolen Gas

April 11, 2012

Pemex Exploracion Y Produccion (0195730D) can’t sue six U.S. energy firms including ConocoPhillips Co. (COP:US) as part of a lawsuit seeking more than $300 million for Mexican natural gas condensate allegedly stolen by bandits and sold in the U.S., a federal judge ruled.

The Mexican state-owned oil company said in court papers that if its production unit was denied permission to add the six U.S. firms to the existing litigation, Pemex might sue the same companies in a new suit.

In addition to ConocoPhillips and Royal Dutch Shell Plc (RDSA) affiliates, Shell Chemical Co. and Shell Trading (U.S.) Co., Pemex sought to add Marathon Petroleum Co. LP (MPC:US), Sunoco Partners Marketing & Terminals LP and FR Midstream Transport LP to litigation originally filed against BASF Corp. (BASF) and Murphy Energy Corp., among other U.S. gas transportation and processing firms.

The Petroleos Mexicanos’s production unit “has undisputedly known about the injuries alleged in this action for years,” and its actions show the company “has purposely delayed moving to add these defendants,” U.S. District Judge Simeon Lake in Houston said in a ruling yesterday.

‘Complex Issues’

“The addition of new defendants would add new and complex issues to an action that is already protracted and complicated,” Lake said in denying permission to add the firms.

Pemex will be allowed to add three other U.S. firms, Plains Marketing LP, RGV Energy Partners LLC and St. James Energy Operating Inc., to the case. The judge ruled these companies were already tangentially involved through related parties.

Pemex for two years has accused U.S. companies of facilitating a black market in natural gas liquids by knowingly buying the stolen gas condensate from Mexican bandits. The organized criminal gangs steal the gas from the Burgos Field in northern Mexico and haul it across the border in hijacked tanker trucks, according to court papers.

“As long as they see a market for stolen Pemex condensate, they will find a way to steal it,” attorney James Teater said in 2010 court papers, referring to Mexican bandits who have eluded Mexican Army helicopters and troops deployed to defend the oilfields.

Criminal Charges

Five individuals named in Pemex’s original lawsuit have pleaded guilty to U.S. criminal charges linked to the smuggling scheme. None of the people convicted were employed by BASF or Murphy, the largest of the U.S. firms defending the accusations.

Ileana Blanco, Pemex’s lawyer, didn’t immediately return a call or e-mail after regular business hours yesterday seeking comment on the judge’s ruling.

Shane Pochard, Marathon Petroleum’s spokesman, declined to immediately comment on yesterday’s ruling. Shell Oil spokeswoman Deena McMullen and ConocoPhillips representative Aftab Ahmed didn’t immediately respond to calls or e-mails after regular business hours yesterday seeking comment.

Representatives for Philadelphia-based Sunoco Partners Marketing & Terminals and for San Antonio-based FR Midstream Transport couldn’t immediately be reached for comment yesterday.

The case is Pemex Exploracion Y Produccion, v. BASF Corp., 4:10-cv-01997, U.S. District Court, Southern District of Texas (Houston).

To contact the reporter on this story: Mary Romano in New York at mromano6@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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Companies Mentioned

  • COP
    (ConocoPhillips)
    • $85.67 USD
    • -0.13
    • -0.15%
  • MPC
    (Marathon Petroleum Corp)
    • $77.41 USD
    • -0.68
    • -0.88%
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