Pemex Sues BASF Over Stolen Feedstock

Pemex, Mexico’s state-owned oil and gas company, is suing BASF in a Houston federal court for buying natural gas condensate stolen from its Burgos Field in northern Mexico. In its complaint, Pemex says that since 2006, thieves have stolen $300 million worth of condensate, a liquid hydrocarbon by-product of natural gas production. The criminal ring had been the subject of a federal investigation. Smuggled over the border and purchased through a chain of intermediaries in the U.S., the condensate was sold by Trammo Petroleum to BASF, which used it as a feedstock at its Port Arthur, Texas, ethylene cracker. Donald P. Schroeder Jr., president of Trammo at the time, is among five individuals who have pleaded guilty to federal charges for their participation in the smuggling ring. BASF and another company named in the suit, Murphy Energy, have not been charged with any crimes. “Their purchases, even if unwitting, encourage more theft and violence to obtain the condensate to sell in the U.S.,” says James S. Teater, an attorney for the law firm Jones Day, which is representing Pemex in the case. In a statement, David Stryker, senior vice president and general counsel for BASF Corp., the firm’s North American arm, acknowledges that BASF unknowingly purchased stolen condensate. “BASF also stopped purchasing condensate from Trammo and other sources or locations on or near the Mexican border immediately upon learning of Trammo’s conduct,” he says.