Glimmer of Hope for Operators; 2021 Concerns for PEMEXBy MBN Staff | Thu, 12/24/2020 - 14:16
A looming crude deficit gives operators hope after a torrid year at the hands of COVID-19. Meanwhile, concerns over the competitivity of the retail sector are raised by COFECE and Moody’s warned that PEMEX’s grade could be lowered next year. PEMEX acted to cut ties with a company linked to the president’s cousin, while the president himself vowed that “corruption will not exist.”
All this and more in The Week in Oil and Gas.
Rystad Energy has predicted that a crude oil deficit during 2021 gives operators an opportunity despite the heavy oversupply that has plagued prices during the last year.
“Monthly supply deficits will start from May, reaching a high of around 3.4 million barrels per day in August. As deficits continue uninterrupted through the year, August’s high could be repeated, if not exceeded by year-end,” said the report published this week by the consultancy firm.
The Federal Commission of Economic Competition (COFECE) said that a draft bill presented by the Ministry of Energy and the Ministry of Economy would reduce competitivity in the downstream market because it would restrict permits that private companies’ need to import gas.
“PEMEX is the only company that produces petroleum products in the national territory, so in the market of commercialization of gasoline it only faces competition through imports made by other companies (marketers). Therefore, in order for there to be competition in this market, it is indispensable that the associated regulation does not obstruct or make it unjustifiably difficult to obtain, use and renew the necessary permits for the importation of these products and that SENER guarantees their expeditious and non-discriminatory granting,” read COFECE’s statement.
Moody’s Investors Service said that PEMEX’s grade could slip further if Mexico’s credit rating is downgraded next year.
The credit agency already downgraded PEMEX’s rating to “Ba2”, following a downgrade on Mexico’s sovereign rating, and will wait to see how Mexico performs following the COVID-19 pandemic.
The NOC’s heavy debt load and reliance on the federal government means that any downgrade to the Mexico’s sovereign Baa1 rating would “likely result in a downgrade of PEMEX’s rating,” Moody’s said.
PEMEX terminated four contracts with companies related to Litoral Laboratories Industries (LLI) which is controlled by President Andrés Manuel López Obrador’s cousin, this week.
The contracts were terminated after they the NOC decided that there was a lack of disclosure of participants’ ties to the government during the bidding processes.
LLI, which provides chemical and microbiological testing on oil products, had previously won 25 contracts with PEMEX during the presidency of Enrique Peña Nieto.
However, PEMEX’s statement said that Felipa Guadalupe Obrador Olán, the current president’s cousin, was ordered to stop negotiating with PEMEX but ignored the demand.
Speaking on the matter, President Andrés Manuel López Obrador said that “even when it comes to family, corruption will not exist.”