Pemex doubles its losses

In 2019, the state company led by Octavio Romero Oropeza reported losses of 346,135 billion pesos, 92% more than the figure for 2018, according to its financial report on December 31st last year.

MEXICO CITY (Reuters) – Since his presidential campaign, Lopez Obrador promised to rescue the state-owned production company by stabilizing and increasing its oil production, after becoming the most indebted oil company in the world during the PRI administration of Enrique Pena Nieto.

Government support has materialized with a larger budget, debt renegotiations, and reductions in its tax burden. Still, the company faces external and market challenges that have put pressure on its financial results.

In a document for the fourth quarter of 2019, the company explained that the negative result is due to lower sales revenues, mainly due to lower crude oil exports and a high tax burden.

These results are affected by the inertia and lags of recent years. Still, the company has recorded significant improvements, said the corporate director of finance of Pemex, Alberto Velazquez, during a conference call of its financial results, which did not allow questions from analysts.

Total liabilities of the Mexican oil company grew 10% to 3.88 trillion pesos, pushed by short-term debt that increased 27%, with a financial cost that grew 23%. The reserve of employee benefits shot up 35% to 1.45 trillion pesos last year.

Despite efforts to refinance its financial debt to 36 billion dollars, Pemex’s debt rose to 105.2 billion dollars.

“For the new administration, debt management was a great challenge,” said Emmanuel Quevedo, associate director of finance for Pemex.

Over the past year, credit rating firms Moody’s and S&P put Pemex’s rating from a negative perspective, while Fitch downgraded it to a speculative grade.

Pemex recorded an underperformance of 35% against the authorized in 2019, while it failed to meet its oil target, and its production fell 7% in 2019. The company attributed this result to delays in infrastructure construction, bad weather, and operational problems in drilling wells.

“We are on the right track to consolidate step by step, this operational and financial position of Pemex,” said Velazquez in the results message.

López Obrador’s government intends to increase oil production to 1.8 million barrels per day this year and 2.4 million barrels per day.

Although the energy reform of the last six years allowed alliances between Pemex and private companies to develop fields and reduce the risks of exploration and development, the current president closed the door to more “farmouts,” as well as more rounds to bid for contract areas.

The Yucatan Times
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