PEMEX Replaces CFOBy Cas Biekmann | Fri, 12/03/2021 - 09:24
State oil company PEMEX has replaced its Chief Financial Officer in the first C-level shift during the López Obrador administration. Risk Management Chief Antonio Lopez Velarde succeeds Alberto Velazquez Garcia, who has been assigned to the NOC’s new unit that will market petrol products, petrochemicals and gas.
In the statement of replacement mentiones to be in interim capacity, so whereas PEMEX aims to replace its CFO. It is unclear whether Lopez will remain at the helm of the company’s financial affairs.
Velazquez faced severe challenges as a CFO, inheriting the NOC with heavy debt burden and declining production numbers. During his tenure, these issues resulted in an ever-growing debt to multiple partners, contractors and suppliers. Another issue to consider was Velazquez’ communication to investors. “Communication was not his strong suit, and that created a perception among investors. He failed to convince them,” Alejandra Leon, Latin America Upstream Director at IHS Markit told Bloomberg News.
Data from November 30 shows that PEMEX increased its debt with contracted suppliers by 32.66 percent, amounting to US$2.275 billion. Debt recognition decreased by 45 percent. The NOC did manage to pay off a major part of what it owed to its partners, lowering its debt by 20.34 percent to US$2.719 billion. Decreased national spending and the COVID-19 pandemic further compounded the trouble the NOC must confront.
Nevertheless, PEMEX did improve its track record while Velazquez was CFO. “PEMEX has made good progress over the past three years toward reversing production decline, materially increasing reserve replacement and curbing its growing debt trajectory,” wrote Lucas Aristízaba, Senior Director, Fitch Ratings in an Expert Opinion piece for MBN. “The company’s next test will be to prepare itself for the challenges of the energy transition to lower-carbon markets and increasing environmental regulatory scrutiny,” he added, pointing toward the NOC’s future challenges.
Leon also mentioned that PEMEX’s decision making had moved to the government level. President López Obrador vowed to save the NOC and make it a cornerstone of the country’s energy self-sufficiency, increasing his influence over the company in the process. “The decisions being taken at PEMEX are now coming from the finance ministry and the presidency,” she said, adding that the Ministry of Finance chose Velarde due to his 20-year experience at the company in areas related to finance and insurance.
López Obrador reiterated his goals for the NOC: “We will achieve the goal of not purchasing gasoline and diesel abroad. We are going to produce and sell these fuels in the domestic market. This means not exporting crude oil and transforming our raw materials in Mexico,” the president said.