Bloomberg News

Pemex Sues ConocoPhillips, Shell in New Stolen Gas Lawsuit

April 11, 2012

Pemex Exploracion Y Produccion filed a new lawsuit against six U.S. energy firms, including ConocoPhillips Co. (COP:US), after a judge refused to add the firms to a previous case seeking more than $300 million for stolen Mexican natural gas condensate sold in the U.S.

The Mexican state-owned oil company filed the new claims after regular business hours in Houston federal court yesterday after its production unit was denied permission to add the six U.S. firms to the existing litigation.

In addition to ConocoPhillips and Royal Dutch Shell Plc (RDSA) affiliates, Shell Chemical Co. and Shell Trading (U.S.) Co., Pemex sued Marathon Petroleum Co. (MPC:US), Sunoco Partners Marketing & Terminals LP and FR Midstream Transport LP in the new action. Pemex had tried to add the companies to litigation pending since 2010 against BASF Corp. (BAS), Murphy Energy Corp. and a number of other U.S. gas transportation and processing firms.

“The condensate at issue in this lawsuit is the sovereign property of the United Mexican States,” Mark Maney, Pemex’s lawyer, said in the new lawsuit. “This lawsuit is directed at some of the individuals and entities who traded in the stolen condensate within the United States.”

Stolen Property

Pemex said in the complaint that some buyers didn’t know they were buying stolen property, while others knew it was.

In either case, “the defendants took possession of Mexico’s sovereign property without right or title. All defendants are therefore liable for their individual usurpation of Mexico’s patrimony,” Maney said in the filing.

Pemex has accused U.S. companies for two years of facilitating a black market in natural gas liquids by knowingly buying the stolen 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,” James Teater, the firm’s former attorney, said in court papers in 2010, referring to thieves who have eluded Mexican army helicopters and troops deployed to defend the oilfields.

Three Companies

U.S. District Judge Simeon Lake yesterday allowed Pemex to add three other U.S. firms, Plains Marketing LP, RGV Energy Partners LLC and St. James Energy Operating Inc., to the original case. Lake said he found these three companies were already tangentially involved through related parties.

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.

Shane Pochard, Marathon Petroleum’s spokesman, declined in an e-mail today to comment on the litigation. Shell Oil spokeswoman Kayla Macke and Janet Grothe, a ConocoPhillips spokeswoman, declined to comment, each citing a company policy against discussing ongoing litigation.

Representatives for Philadelphia-based Sunoco Partners Marketing & Terminals and for San Antonio-based FR Midstream Transport, both of which are closely held, couldn’t immediately be reached for comment.

The case is Pemex Exploracion Y Produccion, v. Murphy Energy Corp. et al, 4:12-cv-01081, U.S. District Courts, Southern District of Texas (Houston).

To contact the reporter on this story: Laurel Brubaker Calkins in Houston at laurel@calkins.us.com

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


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Companies Mentioned

  • COP
    (ConocoPhillips)
    • $70.13 USD
    • -0.92
    • -1.31%
  • MPC
    (Marathon Petroleum Corp)
    • $88.62 USD
    • 0.24
    • 0.27%
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