PEMEX Needs Financial Support to Refinance Debt

Among this week’s top stories, PEMEX is in talks with the government to refinance its debt in 1Q23. Meanwhile, toward the end of 2022, oil prices have gradually decreased and subsidies have been cut correspondingly.

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PEMEX Plans to Refinance Its Debt

PEMEX is in conversations with the government to gain financial support so it can refinance its debt in 1Q23. The payment due for 1Q23 amounts to US$4 billion while the company’s total payments are US$7.5 billion for 2023 and US$8.9 billion for 2024. The company has received government support such as capital injections and reductions on federal utility sharing rights. Despite a 56.5 percent year-on-year rise in its revenue, the NOC reported a MX$52 billion (US$2.6 billion) net loss in 1Q22. In this scenario, Moody’s Investors Service recently downgraded PEMEX’s credit rating based on its economic prospects due to a negative debt record and economic outlook. This may mean that the oil company will need to depend further on the government to decrease its debt. 

Subsidies on Gasoline Continue to Decrease

Although the market remains volatile, toward the end of the year oil prices have gradually decreased and subsidies have been cut correspondingly. The tax stimulus decreased to 24.49 percent, reaching MX$1.35/l (US$0.07/l) for gasoline with a level below 91 octane. Benefits stay at 0 percent for gasoline with a level equal to or above 91 octane, while for diesel, subsidies stand at 66.93 percent, reaching MX$4.04/l (US$0.20/l). Premium gasoline has reached three consecutive weeks without the stimulus, as customers have to pay the total MX$4.64/l (US$0.23).

PEMEX Announces US$12 Billion Spending on Environmental Strategy

PEMEX approved an investment of US$11.97 billion to enhance its environmental performance. With the actions contained in its 2023-2028 Business Plan, the NOC seeks to capture 98 percent of its emissions, phase out fuel oil production and increase electricity production via clean cogeneration technology. PEMEX reported to have reduced its emissions by 30 percent during 2Q22 and currently captures 93 percent of its emissions from its oil extraction processes. According to its business plan, PEMEX will invest US$5.66 billion to stop producing fuel oil, which represents 30 percent of its current refined production. Since 2021, PEMEX had planned to drop its fuel oil production to 28 percent by 2H22, 27 percent by 2023 and 17 percent by 2024.  

CNH Approves Hokchi Energy’s 2023 Work Plan

CNH approved Hokchi Energy’s work plan and budget for 2023. The budget approved for the Hokchi field near the coast of Tabasco is US$198.33 million, of which 51.1 percent will be for development, 45.06 for production and the rest for abandonment. The plan includes the drilling of three wells and the termination of another four, plus three minor repairs. Hokchi expects to retrieve 10.86MMb of crude and 3.91Bcf of gas. Hokchi is the third-largest private contributor to Mexico’s oil and gas production and the 14th-most important field at a national level. In September, the IOC announced that it plans to produce more than 32Mb/d in 2023.

AMEXHI Highlights Social Contributions of the Industry

The Mexican Association of Hydrocarbon Companies (AMEXHI) published a compendium of different social programs and collaborations spearheaded by hydrocarbons companies in the communities where they operate. The companies included in this compendium are BHP Mexico, Chevron, DS Servicios Petroleros, Eni, Hokchi Energy, Jaguar E&P, Petronas, Repsol, Shell, TotalEnergies and Wintershall Dea. The goals of their programs include promoting the talent of people who want to join the energy sector, the empowerment women and mothers to start their businesses or professionalize their skills, the strengthening of basic and health services, accelerating economic recovery, boosting environmental conservation, protecting endangered species and the preservation of cultural heritage, among others.