Citigroup, Deutsche Bank Provide Financing to PEMEX

Citigroup and Deutsche Bank have stepped in to provide financing to PEMEX to help it settle debts with SLB. The financing arrangement involves SLB issuing more than US$1 billion in credit-default swaps (CDS) to the two Wall Street firms, effectively offering a guarantee against a potential PEMEX default on the loan. SLB disclosed the issuance of US$550 million in CDS in July, as well as US$560 million in January in US federal filings but did not reveal the names of the banks involved.

PEMEX, burdened by debt and low oil production, has struggled to maintain profitability. The company has only reported a profit in three of the past 14 years—2012, 2022, and 2023—relying heavily on government support through tax incentives and capital injections. The NOC’s refining division has also faced consistent challenges, posting consecutive losses from 2010 to 2023, despite high utilization rates and favorable policy conditions in recent years.

PEMEX's financial condition has deteriorated significantly over the years, with its overall liabilities increasing from US$121.9 billion in 2010 to US$233.4 billion in 2023. If PEMEX were a country, its liabilities would rank as the seventh-largest economy in Latin America. Additionally, PEMEX has amassed substantial financial debt, making it the world’s most indebted oil company. The company's total financial debt surged from US$53.7 billion in 2010 to US$105 billion in 2018, where it has remained for several years.

Despite receiving support amounting to MX$165.6 billion, PEMEX ended the first half of 2024 in red, with losses totaling MX$251.3 billion, as previously reported by MBN. The company posted a second-quarter loss of approximately MX$255.9 billion (US$14 billion), contrasting its MX$25.4 billion profit for the same period last year. This marks the NOC’s steepest loss since 1Q20, when the pandemic led most oil companies to reduce their profits and drove oil prices to unprecedented negative levels.

PEMEX Industrial Transformation reported the worst performance among its subsidiaries, with losses of MX$261.7 billion. The company’s debt to suppliers and contractors reached MX$362.5 million, a 56.8% increase compared to the same period in 2023. The losses were primarily attributed to the recent weakening of the Mexican peso, according to Carlos Cortez, CFO, PEMEX.