An office of the Federal Electricity Commission in Mexico City Rogelio Morales
The Federal Electricity Commission (CFE) seeks to renegotiate a massive natural gas supply contract signed during the Administration of President Enrique Peña Nieto, considering that one of the companies in the agreement behaves abusively. CFE spokesman Luis Bravo has informed EL PAÍS that the utility has approached Targa Resources, one of the largest infrastructure companies in North America, to explore the possibility of buying gas directly from them and eliminating its partner in the contract. , Whitewater Midstream. Whitewater is being investigated by authorities in Mexico and the United States for possible corruption and influence peddling, according to CFE.
“The CFE is doing one thing that is very important, which is to eliminate abusive intermediaries. And that abusive middleman is called Whitewater, ”Bravo said of Whitewater Midstream, a Texas-based gas marketer which, within months of its founding, began winning multi-million dollar contracts with the CFE. The state company has had "approaches" with Targa Resources, a partner of Whitewater in the contract signed in 2017, he assured. "You can look for the possibility of buying directly from Targa and eliminating intermediaries such as Whitewater, who are abusive," reported Bravo.
An investigation by EL PAÍS exposed the ties between Whitewater Midstream and Guillermo Turrent, a former CFE official. Turrent awarded a contract for the supply of 1,000,000 MMBtu of natural gas, approximately 15-20% of Mexico's daily import demand, to Whitewater in association with Targa Resources in November 2017, according to an internal document obtained by EL COUNTRY. "What the CFE is doing with all the companies that it discovers that there are intermediaries who are under conditions of what we call 'leonine contracts', it will go looking for the possibility at the time of eliminating or renegotiating them," said Bravo.
Targa Resources, headquartered in Houston, Texas, is one of the largest energy infrastructure companies in North America and is listed on the US Stock Exchange Its business focuses on gas processing, transportation and storage.
Whitewater, founded in 2016, did not have assets, experience or financial solvency when they won contracts with CFE International, a CFE subsidiary abroad, the state-owned company reported in a statement on July 16.
Both the founder and a senior Whitewater executive worked with Turrent between 2000 and 2001 at the Royal Dutch Shell company in California, as recorded in documents from the energy regulator in that country that are part of an open case about possible excessive charges to the State.
According to the CFE, Whitewater signed three contracts with CFE International under the direction of Turrent.
“The contracts with this company are unfavorable and unbalanced, with clauses and leonine conditions such as that CFE cannot terminate a 15-year gas contract under any circumstances, it cannot penalize the private company under situations of non-compliance in the supply, the amounts of CFE's guarantees to the company are out of the market and gas volumes are increasing and without being linked to the needs of CFE's generation plants, ”the state-owned company reported.
On July 7, Whitewater issued a statement to inform that it had initiated an arbitration process against the CFE for non-payment and rejected the accusations made by the state-owned company.
Neither Targa nor Whitewater responded to requests for comment via email on the possible renegotiation of the contract.
President Andrés Manuel López Obrador seeks to change the Constitution to shield an energy reform that privileges state companies, the CFE and Petróleos Mexicanos, over private initiative, reversing the laws passed during the previous Administration that opened the market.
"Seeking to eliminate these intermediaries is for the good of the CFE and the Mexican State," declared Bravo, "these contracts harm the interests of the Mexican state."
The @CFEmx will act legally, both criminally and civilly, in Mexico and the United States, on the contracts entered into with the Whitewater company.
https://t.co/1NzTAW35Je pic.twitter.com/HlzCw4ochj
- Manuel Bartlett (@ManuelBartlett) July 18, 2021
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