PEMEX Eyes Debt Reduction Below US$100 Billion

PEMEX is targeting a reduction in its total debt to approximately US$99.4 billion this summer, as reported by Hart Energy. This would mark the first time in a decade that the company’s debt falls below the US$100 billion threshold.

By the end of 1Q24, the NOC’s debt stood at US$101.5 billion. President López Obrador has stated that debt reduction under his administration will total US$32.9 billion, a 24.9% decrease from the US$132.3 billion at the start of his term.

PEMEX’s CEO, Octavio Romero, has emphasized that the company is not bankrupt, noting a debt payment of MX$624 billion (US$34.67 billion) has been made. However, PEMEX continues to grapple with its over US$100 billion debt, declining oil production, and insufficient investment in critical production areas. The company will face significant debt amortizations by 2025, posing a major challenge for the next administration, according to María Ariza, Director General, Institutional Stock Exchange (BIVA).

As the main issuer of debt on the Mexican Stock Exchange (BMV), PEMEX is obligated to pay US$6.3 billion in debt this year, with maturities of US$6.8 billion in 2025 and US$10.5 billion in 2026, as reported by El Economista. Over the next three years, the company will require around US$23.6 billion to meet its financial commitments. PEMEX’s debt reached a peak of US$136.6 billion in 2020 during the COVID-19 pandemic, a stark contrast to the 2008 low of US$64.8 billion.

The current administration's energy policy has led to fiscal costs estimated at MX$1.8 trillion (US$90 billion), primarily due to reductions in the Shared Utility Right (DUC) and capital contributions to PEMEX, according to the Center for Economic and Budgetary Research (CIEP). In addition to PEMEX's increased participation in the downstream sector, the government has implemented measures against fuel theft, known as huachicol. President López Obrador claims that savings from the anti-huachicol strategy have financed the Dos Bocas refinery, a project that has doubled its costs and faced multiple delays. Despite these setbacks, the government asserts that the Dos Bocas refinery will begin full production by the end of July.