Mexico’s President Andrés Manuel López Obrador does not rule out a possible listing of the ailing state oil firm Pemex on the local market.
Pemex could also issue a new bond, Reuters quoted López Obrador as saying on Wednesday. However, such moves to raise funds for the indebted oil company are not necessary, the president noted.
Last month, Mexican officials said that the country would support Pemex by injecting US$3.6 billion into the debt-laden firm, including by refinancing debt and cutting taxes.
The Mexican government, however, will not take on new debt for Pemex, Reuters quoted officials as saying in mid-February.
The Mexican state oil firm has a total of US$106 billion in financial debt.
Mexico’s left-wing President López Obrador—in office since December 1—wants a greater role for Pemex in reversing the downward trend in Mexican oil production.
Pemex’s crude oil production continues to decline—according to Pemex figures, its crude oil production averaged 1.813 million bpd in 2018. To compare, Pemex’s crude oil production averaged 2.429 million bpd in 2014, falling to 1.948 million bpd in 2017.
López Obrador and Pemex have grand plans for reversing the decline, with the government coming to the rescue of Pemex, as the oil firm itself said in December. A new strategic plan aims to guarantee “the country’s energy security and sovereignty” and targets to raise crude oil production to 2.48 million bpd by the end of this administration’s term in office—the end of 2024.
In January, Fitch Ratings downgraded Pemex’s ratings to just above investment grade, raising concerns that additional downgrades by Fitch or another rating agency would significantly lift the oil firm’s financing costs while it struggles with a heavy debt load.
Earlier this month came a downgrade for Pemex from Standard & Poor’s, due to concerns that the government support may not be enough to heal the company’s finances and reverse the production decline.
A day after the S&P downgrade, López Obrador said that the rating agencies’ downgrades were punishing Mexico for the neo-liberal policies of his predecessors in the past three and a half decades.
By Tsvetana Paraskova for Oilprice.com
