Maya Averbuch and Scott Squires, Bloomberg News
MEXICO CITY
EnergiesNet.com 11 14 2024
Mexico is looking to address Petroleos Mexicanos’ nearly $100 billion debt load without having the company turn to capital markets in the short term.
President Claudia Sheinbaum’s administration is “designing mechanisms to address Pemex’s debt commitments without going to debt markets,” Deputy Finance Minister Edgar Amador said at a news conference in Mexico City on Wednesday.
The government also unveiled plans to simplify the structure of taxes Pemex must pay from three different duties to just one, leaving it to pay 30% in general taxes next year, Sheinbaum said during the news conference.
While it’s not currently the government’s approach, a Pemex debt refinancing in the future “shouldn’t be ruled out,” Sheinbaum said.
“That is part of the permanent discussions between the finance ministry and Pemex,” Sheinbaum said. “Today there is a lot of coordination between the energy secretary, Pemex, and the Comision Federal de Electricidad. They’re one team, working along with the finance ministry.”
Mexico will look for opportunities for Pemex to return to global borrowing markets at some point, but not next year, Deputy Energy Minister Jorge Islas said at a separate event later in the day.
One of the reasons why it’s important to coordinate the relationship between Pemex and the finance ministry is that the national government has access to better borrowing terms than the company, Sheinbaum said.
The proposals come as the president and her management team look to shore up the state oil driller from its $97.3 billion debt burden and increase production that has slumped to around half of its peak from twenty years ago.
Pemex relies heavily on government handouts to stay afloat. Mexico is planning to set aside about $6 billion for Pemex debt payments in its 2025 draft budget, people familiar with the matter said Tuesday. The company has around $9 billion in debt coming due next year and roughly $13 billion in 2026, when maturities will peak.
Sheinbaum confirmed Wednesday the government was planning to include support for Pemex in the 2025 budget, but she disputed the $6 billion figure. In the past, the government has included a line item for financial support to Pemex that incorporated money for debt payments and other spending needs.
The exact amount to be included in the budget is still being finalized, Amador said.
Pemex is among the world’s most inefficient oil producers, pumping just 14 barrels per employee per day, worse than any of its state-owned peers in Latin America save for Petroleos de Venezuela. The company is also hampered by a bloated workforce, deadly accidents, oil spills, methane leaks and refineries that bleed cash.
Pemex’s Chief Executive Officer Victor Rodriguez said Wednesday the company would seek to save 50 billion pesos annually by streamlining spending as it continues to work to reduce its debt. The company will also partner with state utility Comision Federal de Electricidad to develop clean energy projects, he said.
Sheinbaum had promised Pemex would maintain crude production at around 1.8 million barrels per day and keep gas production around 5 billion cubic feet per day, while she aims to transition Mexico’s grid to 45% renewable energy by 2030.
Sheinbaum has said she envisions Pemex playing a role in Mexico’s transition to cleaner sources of energy and has promised to expand it into green technologies, including hydrogen, lithium extraction and electric-vehicle infrastructure. The company published its first sustainability plan in March after some of its creditors threatened to divest from the company if it didn’t clean up its ESG record.
Mexico’s proposed changes to Pemex’s tax regime may not make a meaningful difference in the company’s bottom line, according to Pablo Medina, an analyst at upstream consultancy Welligence.
“It’s basically a wash, since this new concession regime has a single royalty that all-in-all taxes Pemex almost the same as before,” Medina said. “The finance ministry hasn’t given guidance post-2025, and that’s where it’s key. It seems like they may adjust the tax on an annual basis.”
bloomberg.com 11 13 2024
