PEMEX Reaches Net Profit of MX$1.4 Billion in 3Q20

In 3Q20, PEMEX reported net profit of MX$1.4 billion (US$64 million), compared to a loss of MX$87 billion (US$4.06 billion) in the same period of 2019. The company attributed this to the performance in derivative financial instruments and the profit change generated in that period. PEMEX’s accumulated loss for 2020 amounts to MX$605 billion (US$28 billion). In its report published on Wednesday, PEMEX highlighted that crude oil and condensate production, including partners, was of 1.698MMb/d in September, up from 1.688MMb/d in August.

In early October, PEMEX Director General Octavio Romero declared that in 2020, the NOC registered the highest level of oil exports since 2018. In August, the company exported 114.3Mb/d, 163 percent higher than any other month in the year, according to the Ministry of Economy’s Tariff Information System. MBN reported last week that according to the government’s spending plan for 2021, PEMEX is expected to decrease its crude oil exports to 870Mb/d and will make up for this decline with an increase in oil prices to US$42/b. Nevertheless, factors such as the pandemic crisis and an increase in Libyan production, among others, have affected international prices and have had repercussions on the Mexican oil price.

The company carries a heavy financial debt that rose to US$110.3 billion, as total sales fell 32 percent year-on-year in 3Q20 due to a reduction of 41 percent in domestic sales and 18.6 percent in export sales. "The most important variables that explain this situation are the decrease in volumes sold due to the drop in economic activity as a consequence of COVID-19 and the drop in prices worldwide," said PEMEX in its report. Meanwhile, the cost of sales fell 28.3 percent due to a drop in the purchase of products for resale.

More news below:

• This week, the first virtual edition of the Mexico Oil & Gas Summit took place. "If you would have asked me if we would have a Mexico Oil & Gas Summit this year a couple of months ago, I would have probably told you no, but here we are today, doing an Oil & Gas Summit in a way we have never done it before,” said Jeroen Posma, Founder and CEO of Mexico Business Group, at the opening of the event. During the two-day event, experts, CEOs and managers from across the industry gathered to listen to speakers while having the opportunity to network.  

• During the summit’s opening presentation, José Antonio de la Vega, Minister for Energy Development for the State of Tabasco, said the investment and business opportunities that the Energy Reform has provided Tabasco will be vital for developing the state and Mexico’s entire southeastern region. “Tabasco is the land of opportunity for the energy sector,” said the minister. “As of today, 111 contracts have been awarded from the Energy Reform. Of these, 39 are located on land or in the waters of the state of Tabasco. That is to say, just over a third of all contracts awarded,” he noted. 

• Later on, Carmine De Lorenzo, Managing Director of Eni Mexico, and Francesco Luigi Peselli, General Director of Mizamtec at Eni Mexico, the Italian IOC, considered one of the world’s most industrious companies with a hydrocarbon production of 1,871MMboe/d as of 2019, outlined the company’s role in the sector.

• Two major operators in Mexico’s shallow waters told Mexico Oil & Gas Summit 2020 that accelerating their developments to reach production earlier than expected would benefit Mexico, PEMEX and the companies themselves. “It is critical to deliver production as fast as possible. Everyone benefits from production coming onstream – the Mexican state benefits, PEMEX benefits and Talos and its partners benefit,” said Loren Long, Vice President–Mexico at Talos Energy. He and Andres Brügmann, Country Manager of Fieldwood Energy, presented their views, as well as updates on their companies’ respective developments in a panel moderated by Gaspar Franco, Professor at UNAM’s School of Engineering and former CNH commissioner.

• ‘Upstream Infrastructure, Maintenance and Safety’ was the second panel of Mexico Oil and Gas Summit 2020, moderated by Alejandra León, Director for Latin America Upstream at IHS Markit. During the panel, José Luis González, Head of the Industrial and Commercial Supervision, Inspection and Surveillance Unit at both SEMARNAT and ASEA, highlighted the distinct needs that different kinds of oil and gas facilities present. Likewise, Gareth Burton, Vice President of Technology at the American Bureau of Shipping, explained how risk is managed to avoid COVID-19 contagions in vessels and offshore oil and gas facilities. Read the full highlights here.

• During the Oil & Gas Summit, important issues were also discussed, such as human resources being the backbone of successful oil and gas operations, the importance of social engagement discussed by Jaguar E&P, Oleum Energy and Diavaz DEP onshore operators, the changes needed to improve PEMEX's financial health and the great opportunities that the fuel retail sector is experiencing. 

• Free competition has been effective at a global level, writes this week Fernando Flores, Director General of SIFRAP. The larger the offer, “the better and higher the benefits that users can have. This implies that individuals can get the best products and services at the best prices and at the end of the day, this would be reflected in their wallets,” he says.

• Beicip-Franlab's Rossy Pérez explains this week how her company's relationship with PEMEX has grown as the NOC expands its tech-driven intentions. “Beicip-Franlab is working on new strategies to improve processes during project execution, incorporating knowledge transfer of our methodologies and Software technology use within PEMEX projects development, with the objective to improve its workflows, increase professional development and better develop its field,” she notes in an interview with Mexico Business News.

• Digitalization processes are far ahead of oil and gas offshore maritime logistics and companies must begin their digital transformation. “The current crisis will witness many SMEs going bankrupt, but this is not only a consequence of oil prices, the COVID-19 pandemic or even the lack of payments from PEMEX. It is because these companies are not yet digitized,” Enrique González, CEO & Co-Founder of Nautech de México writes this week.