PEMEX Debt Crisis Sparks Supplier Complaints

PEMEX’s debt with its suppliers has triggered a series of complaints to the Ministry of Finance and Public Credit (SHCP). In one week, at least three of the affected companies have already notified the start of the dispute resolution process due to lack of payment, suspending their services or lodging angry complaints.

The NOC is the most indebted oil company in the world. By the end of March, it owed its contractors nearly US$15 billion – a sum that has more than doubled in four years. Suppliers say the company takes up to six months to pay its bills, leaving some service companies struggling to stay afloat.

According to documents retrieved by Latinus, PEMEX CEO Octavio Romero notified Minter of Finance Rogelio Ramírez de la O that on Sept. 14, Hokchi Energy notified PEMEX of the initiation of a dispute resolution process due to non-payment, stemming from a contract for the purchase of the company’s entire production. Debts have been accumulating since February, amounting to nearly US$188 million, plus interest and financial costs. This action follows prior notifications and warnings sent by Hokchi to PEMEX. So far, the Ministry of Finance, Hokchi and PEMEX have declined to make any comments regarding the dispute resolution process. 

"An urgent meeting with you and your team to review this and the other requirements in previous letters becomes indispensable, as the situation is becoming more complicated day by day,” states Romero in a letter to Ramírez de la O. He also reminds Ramírez de la O that on Sept. 21, a US$1.11 billion international debt bond is due, "which leaves us in a very compromised cash position and would prevent us from paying our suppliers for at least this sixth month of overdue debts."

Another document that Latinus had access to is a letter sent on Sept. 13 by Baker Hughes to Romero. The text, signed by Jesús Rosas, Director General Mexico, Baker Hughes, expressed Rosas’ desire to draw attention "to the unusual delay recently observed in the payment commitments of the different entities within the group." Furthermore, the company claims that "in recent months, there has been a significant increase in the amount of overdue invoices, which currently total US$308 million, representing nearly five months of delay." Baker Hughes also complains that there are no longer monthly meetings with PEMEX's administration and finance departments, further limiting their ability to make resource projections.

The third document is another communication sent by Romero to Ramírez de la O, dated Sept. 18. In it, PEMEX notifies the Ministry of Finance of Ferromex’s suspension of the fuel oil evacuation service from the Tula and Salamanca refineries due to lack of payment. "Without rail service, the only alternative is to use specialized tanker trucks to transport at the appropriate temperature." PEMEX states in the communication that due to the specialization of this transport, the availability is limited to between 12,000 and 14,000b, while the Tula refinery produces 130Mb/d. The NOC's debt to Ferromex totals MX$317 million (US$18.5 million).

PEMEX warns SHCP that without rail shipments, Salamanca will suspend crude oil processing on Monday, Sept. 25, due to lack of capacity, which would trigger a fuel shortage in the Bajio region, putting the supply of aviation fuel to the Guadalajara city airport at risk.

The decrease in production and oil reserves is the main cause of the NOC's debt problems. López Obrador has limited private sector investment in Mexico's oil industry, leaving much of the financial burden of developing the country's oil fields to the state-owned company.