Trafigura Cuts Mexico Oil-Trader Jobs as Policies Crimp Margins

(Bloomberg) -- Trafigura Group is cutting oil-trader positions in Mexico as the government’s nationalist policies squeeze its profit margins.

Five commercial-trading jobs were eliminated this month, according to people with knowledge of the situation who asked not to be identified. One of the roles eliminated was that of oil and gas director Katia Eschenbach, whose departure Bloomberg reported last week. Trafigura’s commercial oil and gas team in Mexico now has three people focused on international trading.

Trafigura declined to comment on the departures, but said in a written statement that the firm “has been committed to Mexico for 25 years and will continue to work in the country.”

“It is a regular task for Trafigura to evaluate its operations globally,” the company said. “This includes some reconfigurations to achieve business objectives.”

Trafigura, one of the world’s largest oil traders, has seen its margins in Mexico compressed by fuel subsidies that were announced last year to help the country cope with inflation. The policies were another setback for the firm, which in 2021 had the government cancel its fuel-import license and ban it from doing business with Petroleos Mexicanos’s PMI oil-trading unit amid allegations of corruption and dealing in contraband supplies. The permits were reinstated last year, but Trafigura hasn’t done much because of the fuel subsidies, according to the people. 

Private energy companies more broadly are struggling to do business in Mexico as President Andres Manuel Lopez Obrador, who took office in 2018, reverses policies that ended 75 years of state monopoly and opened the country to the private sector. 

Trafigura is reducing headcount only in the oil operations, while trading of metals and minerals remain intact, the people said. The oil regional hub, which previously reported to leaders in Geneva, now will report to Felix Guastavino, Trafigura’s head of Latin American oil and gas trading, the people said. Guastavino will remain based in Montevideo, Uruguay, they said. 

Trafigura also is facing construction delays and cost overruns in building a condensate splitter inside Pemex’s gas-processing facility in the shale-rich Burgos region. The splitter was initially expected to be completed in 2017, and investments have so far amounted to about $150 million, according to its annual reports. 

©2023 Bloomberg L.P.