Mexico’s state oil big posted a slight revenue within the first quarter as manufacturing slipped, with authorities help serving to to prop up the debt-saddled firm.
Petroleos Mexicanos posted a revenue of 4.7 billion pesos ($274 million), in contrast with 56.7 billion pesos a 12 months in the past, the corporate reported Friday. Crude and condensate output slid to 1.82 million barrels a day, in contrast with 1.853 million in the identical quarter final 12 months.
Pemex stands as one of many biggest challenges Mexico’s subsequent president will inherit. Slashing its debt burden — probably the most of any oil firm globally — is vital to boosting output, since cash that could possibly be spent fixing getting old infrastructure is as an alternative getting used to cowl curiosity funds. Manufacturing has withered to lower than half of what it was 20 years in the past.
Gasoline costs at a Petroleos Mexicanos (PEMEX) fuel station in Mexico Metropolis, Mexico, in Could 2023.
The corporate’s debt burden stood at round $101.5 billion as of March 31, in accordance with an organization submitting. Pemex’s $4 billion in excellent bonds due 2027 edged up 0.3 cents to about 94 cents on the greenback, as of two:13 pm in New York.
The administration of the outgoing President Andres Manuel Lopez Obrador, or AMLO, has promised to cowl nearly all of this 12 months’s funds, which at present stand at round $6.3 billion. Pemex has relied on tax breaks and money injections from the federal government, which has lavished as a lot as 1.37 trillion pesos, or round $80 billion, to help Pemex throughout AMLO’s tenure.
Pemex expects the federal government’s monetary help for the corporate to proceed as it really works to scale back its debt load, Chief Government Officer Octavio Romero stated on an earnings name Friday.
Officers additionally stated the corporate’s flagship Dos Bocas refinery is about to start producing diesel gasoline in Could, and that the corporate’s home refining capability was “steady” at round 1 million barrels per day.
The corporate declined to touch upon the federal government’s expropriation of a hydrogen plant operated by Air Liquide at Pemex’ Tula refinery in Hidalgo state.
Main candidate Claudia Sheinbaum, AMLO’s chosen successor from the favored Morena get together, is extensively anticipated to proceed on a path of state help for the corporate, though she has offered a plan for Pemex to shift its consideration to cleaner applied sciences, together with spending as a lot as $13.6 billion on new renewable initiatives whereas additionally constructing extra gas-burning energy crops.
“To cite the Speaking Heads, Pemex is ‘the identical that it ever was,” stated Roger Horn, senior emerging-market strategist at Mariva Capital Markets. “Whoever wins the election in June is prone to proceed with extra of the identical of offering simply sufficient help to maintain the ship going.”
Sheinbaum, a former Mexico Metropolis mayor, has additionally stated she expects the corporate to refinance its bonds forward of upcoming maturities in 2025, and that she anticipated the outgoing administration to go away a long-term plan to reverse the corporate’s monetary decline.
Nonetheless, refinancing Pemex’s debt might show difficult. The corporate’s debt load is so massive that has hindered its market entry, and refinancing the bonds might show expensive as international charges stay excessive.
Earlier this 12 months, Moody’s Buyers Service downgraded the corporate additional into junk territory and maintained its destructive outlook, saying the scores minimize mirrored its assumption of a possible shift within the authorities’s willingness to help the total service of Pemex’s debt within the subsequent few years.
Runner-up opposition candidate Xochitl Galvez, who trails Sheinbaum by practically 30 share factors in latest polls, has stated Pemex ought to pursue a mannequin like Brazil’s Petrobras: promoting belongings to pay down debt.