Mexico’s government has ordered the expropriation of Air Liquide’s hydrogen plant at a Pemex oil refinery, citing the need to ensure Mexico’s “energy sovereignty”.

The French company bought the hydrogen plant under the previous administration.

The announcement was made by Mexico’s energy ministry late on Thursday 8 February, 2024, claiming that the third-party supply of hydrogen risks disrupting production at the Tula refinery, owned and operated by the state-run Pemex.

Oil refineries use hydrogen to reduce the sulphur content in petroleum products such as diesel.

Air Liquide has 15 days from the publication of the expropriation order to present its response to the ministry’s legal office.

President Andrés Manuel López Obrador has attempted to increase state control of Mexico’s energy sector through Pemex and the state electricity company CFE since coming to power in 2018. He has also tried to reduce the country’s reliance on diesel and gas imports by ramping up domestic production.

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By GlobalData

His predecessor, the centrist former President Enrique Pen Nieto, sold Pemex’s refining arm under a 20-year contract to Air Liquide in 2017. The French industrial gases and services company was to supply hydrogen for Tula’s operations to lower costs and boost efficiency.

Located in central Hidalgo state, north of Mexico City, the Tula facility is Pemex’s second- largest refinery currently in operation.

In December, the Obrador administration ordered Pemex to take control of the hydrogen plant. The President declared the hydrogen supply from the plant was a matter of “public interest”.

Obrador has accused opponents on the political right of rigging the energy market in favour of corporate elites, and his policy decisions have led to trade disputes with the US and Canada.

In similar fashion, the government spooked investors in 2023 when it took over part of Grupo Mexico’s railway.