A Difficult Week For PEMEX’s Finances

CFEnergía and CFE International Director Miguel Reyes Hernández said that Mexico’s dependence on US natural gas for energy was caused by previous administrations and the contracts they signed with foreign companies: “The contracts were agreed to in the past two administrations with private gas pipelines. We have 18 transportation agreements and 24 supply agreements with the US, which have a duration of between 15 and 25 years. Meanwhile, in the last 30 years, PEMEX’s natural gas production and reserves were dismantled,” reported MBN. These points of view were echoed by independent oil and gas analyst and former PEMEX independent advisory board member Fluvio Ruiz Alarcón, in an interview published by El Economista. Ruiz Alarcón said that “PEMEX is in urgent need for a natural gas strategy.” However, such a strategy would require the NOC to have access to more funds of its own to invest in natural gas exploration, production, processing and distribution activities and infrastructure. 

President López Obrador said PEMEX’s tax burden will be reduced by way of presidential decree. Is this reduction enough for a positive outlook on PEMEX’s financial situation? The signals are mixed. A report released this week by El Economista indicated that both PEMEX and CFE reported a reduction of 18.2 percent in their yearly earnings of 2020. Meanwhile, MSN Dinero also released a report that details PEMEX’s US$6.15 billion in outstanding debt to 42 contractors, suppliers and service providers, although this report also shows that PEMEX has started to pay its debt. In addition, MBN reported that crude prices are recovering and beginning to reach pre-pandemic levels. Bloomberg also reports that creditors are beginning to trust the Mexican government following its continuous support to PEMEX through difficult times. Nevertheless, the NOC cannot continue to depend on this support forever, especially as major international oil companies are forced by environmental circumstances to reconsider their role in national development, as detailed by Animal Político.