Is Austerity Creating Safety Concerns For PEMEX?

A string of recent incidents at different PEMEX facilities have led media sources to speculate that the government’s austerity measures might be affecting the NOC’s safety standards.

The incident that received the most media attention was a fire in the Salina Cruz refinery in Oaxaca. The fire consumed a portion of the refinery’s facilities but no fatalities were reported, only material losses. The fire began on the refinery’s second plant due to what PEMEX referred to as a “technical failure,” although the NOC released no public acknowledgement of the incident until days later, when a representative spoke to Reuters and claimed that the fire was extinguished through internal processes and that the refinery was back to normal daily operations.  

However, a report from Oil & Gas Magazine reveals that this fire was actually the third significant accident at PEMEX facilities in a  week. The first one was another fire in  a storage tank in the port of Dos Bocas, Tabasco. The second accident also happened at this port when a fuel tanker caught on fire as well. No death or injuries were reported at any one of these incidents. 

This frequency is what led the report to speculate as to the possible influence of PEMEX’s austerity measures on its accident rates. The accident frequency index for PEMEX facilities increased 100 percent from 2Q20 to 2Q21. Just from the first day of 2Q21 to its last day, the frequency of accidents increased 56.2 percent. PEMEX has made no public acknowledgement of these other incidents and statistics.

If these accidents are the result of austerity measures and conditions, it is worth mentioning that the NOC’s current financial conditions might not give it the space necessary to relieve itself of some of these austerity-imposed limits. For example, another Oil & Gas Magazine report reveals that PEMEX still owes over US$2.867 billion to over 150 contractors, suppliers and service providers. During the last four months in which PEMEX has been executing a special debt liquidation program, the NOC has only been able to reduce this outstanding debt by 5.2 percent. Affected companies include Samson Control, Rockwell, Siemens, Halliburton, Cotemar, Praxair and Química Apollo. The NOC’s income might also be affected as oil prices begin to be impacted by the Delta variant. Crude prices in general are experiencing a 2 percent decline worldwide, while the price of PEMEX’s export mix was hit with an 8.65 percent decline.