Pemex Vowed No More Fatalities. At Least Six Workers Have Died Since.
Mexico’s state-run oil company, facing heightened scrutiny over a string of deadly accidents at its facilities, set an ambitious goal early this year: No more fatalities.
Just weeks after announcing that target, an explosion at a Petroleos Mexicanos oil platform killed one and injured nine. Five months after that, a refinery fire fatally wounded two. In October, a chemical leak at the company’s only US facility killed two others and sent 13 to the hospital. And last week, a fuel truck accident near Mexico City left one dead.
This year’s deaths are only the latest in Pemex’s decades-long legacy of fatal accidents. The oil producer leads its peers in worker fatalities and, in 2020, reported more COVID-related deaths than any other company in the world. Creditors frustrated by that record have ramped up pressure on the company, prompting Pemex in March to release its first-ever sustainability plan – which included a target of zero worker deaths.
Pemex’s failure to deliver on that pledge raises questions about whether the world’s most indebted oil company can continue to count on support from investors. Although Pemex receives cash infusions from the government – ensuring its survival — the company is nevertheless beholden to bond markets if it seeks to refinance its debt, which stood at around $97 billion at the end of the third quarter. And the company’s inability to meet its own safety goals is likely to deter US and European investors with ESG mandates of their own.
Pemex declined to comment on this story.
The company is facing numerous investigations and litigation over the US accident at a time when its insurers in Mexico are suspending their coverage.
Yet improving Pemex’s safety record will require a massive investment in infrastructure at a time when its refineries are bleeding cash.
“Pemex is so under-invested that I’m surprised they haven’t had more accidents,” said Carlos Legaspy, chief executive officer of Insight Securities, an investor in the company. “It’s like a leaky roof, you’re able to keep plugging the holes, but not enough to get a new roof.”
That some of this year’s fatalities occurred at a US facility raises further scrutiny of its safety practices, with federal probes and nascent lawsuits revealing details about the accident that, in Mexico, likely wouldn’t be made public.
Worst Leak in 10 Years
The accident at the Deer Park refinery, just outside of Houston, marked Texas’ biggest release of deadly hydrogen sulfide gas in at least 10 years, according to a Bloomberg analysis of state data.
Two Killed After Leak at Texas Oil Refinery Worked for Maintenance Subcontractor
The leak — at a unit used to strip gases from oil products – ran unchecked for an hour, killing two contractors on site and necessitating shelter-in-place orders across two communities, according to the US Chemical Safety and Hazard Investigation Board.
Workers injured in the accident are suing Pemex, alleging that the company violated its own safety protocols by leaving a valve near the amine unit unlocked – an indication that the equipment had been purged and was ready for work, according to Houston attorney Kurt Arnold, who is representing the plaintiffs. In fact, the section of pipe that had been emptied and readied for repairs was five feet away, according to the Chemical Safety and Hazard Investigation Board, which is investigating the accident.
Ryan Zehl, another lawyer representing injured workers, said the facility’s own alarm system failed, with some contractors only aware of the leak after their own hydrogen sulfide monitors went off.
“So then, there was a mass exodus and everybody was running for their lives to escape,” Zehl said. “It was chaos.”
Once the leak was detected, Pemex failed to utilize an emergency notification line in a timely manner, delaying first responders, Harris County Commissioner Adrian Garcia said in a press conference the following day.
“We struggled to get timely information from Pemex about air monitoring that was happening at their fence line,” Garcia said. “In fact, the only message posted by the facility indicated only routine flaring.”
A representative for Repcon, the contractor whose employee died in the Deer Park accident, didn’t respond to multiple requests for comment.
Pemex employees and analysts in Mexico say the company’s financial woes set the stage for accidents, with a lack of investment and culture of cost-cutting making mishaps more likely.
At the Salina Cruz refinery in September, overflowing storm drains containing oily runoff fueled a fire that killed two contractors, the plant manager said in a press conference after the incident. And a deadly offshore explosion last year might have been averted with more rigorous inspection, people familiar with the matter said. Pemex had delegated its review of the equipment to a contractor, Cotemar, that undercut competitors by promising to complete work in one week rather than two, the people said.
Cotemar declined to comment on the bidding process and on the cause of the incident, but noted that an investigation by Mexico’s attorney general found neither the company nor its employees responsible for the accident.
The frequency and severity of Pemex accidents have led some of the company’s insurance providers in Mexico to raise concerns about the cost of coverage. In April, some of Pemex’s insurers asked the company to carry out a review of its industrial safety strategy and, by June, had temporarily withdrawn their policies with Pemex, leading to gaps in insurance coverage, according to internal company documents seen by Bloomberg.
The insurance issues shouldn’t affect Pemex’s Deer Park refinery, which currently has sufficient coverage for the October accident, Chief Executive Victor Rodriguez said in a press briefing on Nov. 13. But the company is facing US penalties amid probes by the Chemical Safety and Hazard Investigation Board, Occupational Safety and Health Administration and Texas Commission on Environmental Quality.
“What I see is multiple failures on different levels,” says Faisal Khan, director of the Mary Kay O’Connor Process Safety Center at Texas A&M. “It’s a failure, A) in terms of prevention and, B) in terms of control and mitigation.”
Photograph: The Pemex refinery in Deer Park, Texas. Photo credit: Raquel Natalicchio/Hearst Newspapers/Getty Images