PEMEX Supplier Liabilities Climb in 2Q25 Despite Government Aid

PEMEX reported MX$391.6 billion in 2Q25 revenues and a net profit of MX$59.5 billion, aided by cost reductions and currency gains. However, the company’s growing debt to suppliers, now over MX$430 billion, has raised fresh concerns, even as financial debt declined and the federal government stepped in with renewed financial support.

The 2Q25 revenue marked a 4.4% decline from the same period last year. The decrease is largely attributed to lower oil exports and falling prices for petroleum products such as gasoline. While topline revenue saw a modest drop, other financial indicators reflected more favorable movement. The company’s EBITDA rose by 33.9% to MX$76.0 billion compared to MX$56.7 billion in 2Q24, suggesting improved operational efficiency. 

PEMEX also posted a net profit of MX$59.5 billion, a sharp turnaround from the MX$273.3 billion net loss recorded in the same period of 2024. According to the report, the result was driven by several factors: total revenues from sales and services supported by stable production levels of liquid hydrocarbons and natural gas, as well as growing output of refined products; a 15.6% reduction in cost of sales; favorable peso-dollar exchange rate effects; a newly approved fiscal regime; more efficient use of financial resources; and stronger performance in derivative financial instruments.

However, the NOC’s total debt load remains a major concern, climbing to US$121.8 billion when accounting for both financial debt and outstanding payments to suppliers.The company decreased its financial debt by 2.27% compared to the previous quarter, falling from US$101.1 billion (roughly MX$2.053 trillion at March’s exchange rate) to US$98.8 billion (about MX$1.866 trillion as of June 30). This represents a 5.7% decline compared to 2Q24, when financial debt stood at MX$1.979 trillion. The current figure breaks down to MX$529 billion in short-term obligations and MX$1.336 trillion in long-term debt, down 5.75% and 10.38%, respectively.

Yet while financial debt saw a slight reprieve, Pemex’s obligations to providers continued to rise. The company’s debt to suppliers increased 6.5% quarter-over-quarter, growing from MX$404.4 billion to MX$430.5 billion, despite repeated efforts by the federal government to improve the company’s liquidity and financial standing.

On July 22, the Ministry of Finance announced that it was preparing a new financing mechanism to support PEMEX’s short-term liquidity needs. The deal includes dollar-denominated notes maturing in 2030, structured as Pre-Capitalized Amortizing Securities (P-Caps), a type of asset-backed instrument aimed at raising funds without directly triggering a sovereign guarantee. The government also issued a US$12 billion bond this week through its investment vehicle Eagle Funding LuxCo, according to the International Financing Review of the London Stock Exchange. This issuance came in over US$2 billion higher than originally announced, underlining the scale of resources being mobilized to support the company.

By May 2025, PEMEX had already used more than two-thirds of the MX$136 billion allocated under the government’s debt relief program, drawing down MX$91.3 billion to service its financial obligations, including bond payments and bank loans. The company tapped just MX$2.87 billion in May, slowing its pace of drawdown compared to the MX$7.96 billion spent in April.

Despite these efforts, growing supplier debts remain a flashpoint. Several industry groups across the NOC’s supply chain, including the Mexican Association of Oil Services Companies (AMESPAC), the Mexican Chamber for the Maritime Transportation Industry (CAMEINTRAM), and the Mexican Chamber of the Construction Industry (CMIC), have warned that delayed payments are putting operations at risk. AMESPAC has warned that its members may be forced to halt work unless PEMEX pays down debts now exceeding MX$50 billion. Meanwhile, CMIC President Luis Rafael Méndez has estimated that PEMEX owes member companies around MX$3 billion.

As a stark example of the consequences tied to PEMEX’s mounting debts to suppliers, Grupo México, led by businessman Germán Larrea, temporarily halted its drilling operations across several regions in the country due to continued nonpayment by the NOC. The suspension affected jackup drilling platforms located in Chihuahua, Zacatecas, Campeche, and Tabasco, according to the company’s second-quarter filing with the Mexican Stock Exchange. Its drilling subsidiary, Perforadora México (Pemsa), reported a 64% annual drop in sales to US$42 million and an 89% decline in EBITDA to just US$7 million. “It is better for us to keep the platforms idle than operating, given PEMEX’s situation and its failure to pay suppliers,” the company stated.

Although President Claudia Sheinbaum has acknowledged the company’s ongoing obligations, she sought to ease concerns at a recent press conference. “A potential shutdown is not going to happen,” Sheinbaum said on June 19. “The Ministry of Finance has been working with PEMEX on a mechanism to resolve this issue, along with PEMEX’s own investment. This year, MX$147 billion have already been paid to suppliers, and there is still a portion remaining. But the mechanism is already in place, along with the instruments that have been developed between the Finance Ministry and PEMEX…There will be no risk.”

Nonetheless, the NCO has yet to publicly disclose the current total of supplier debt. While the MX$147 billion in payments referenced by Sheinbaum corresponds to figures through March, it remains unclear how much new debt the company may have taken on since then.

On the operational front, PEMEX’s crude oil production declined 8.6%, from 1.793MMb/d in 2Q24 to 1.638MMb/d in 2Q25. The company cited natural field depletion both offshore and onshore, delays in complex well completions, lower-than-expected initial yields at Xanab, and aging infrastructure at the Ayatsil field as reasons for the decline.

Fernando Cruz, Energy Director, Kannbal Consulting, said PEMEX’s second-quarter profit is a positive signal, but warned that the results may overstate the company’s true financial health due to temporary currency-related gains. “The operational profit of just over 6% and net profit of 2% are encouraging, but much of this improvement comes from exchange rate effects,” Cruz explained, noting that most of the NOC’s costs are in US dollars, and the peso’s strength simply offset financial expenses. The real test, he added, will come with the impact of the government’s restructuring plan and the pre-capitalized bond strategy set to unfold in the second half of the year.

Cruz expressed concern about PEMEX’s declining production, now down to 1.6MMb/d, warning that the near-term goal should be to contain further losses rather than aim for recovery. “PEMEX  has already burned through 75% of its E&P budget in just six months, leaving only 25% for the remainder of the year,” he said. With supplier debt rising from US$19.9 billion to US$22.8 billion in just three months, and major bond repayments looming in 2025 and 2026, Cruz cautioned that short-term liquidity relief from recent bond placements “will be marginal and not immediate.”

He added that while the recently announced mixed contracts could offer a path to boost output, they are not a short-term fix. “These contracts will take time to enter the execution phase, and we still do not know which companies will participate or under what final terms and conditions,” Cruz said.

Adding to these concerns, Pemex’s mounting debts to suppliers could threaten both its short-term output and long-term investment prospects, according to Roxana Muñoz, Senior Vice President and Credit Officer at Moody’s Mexico. She warned that payment delays are already slowing operations, which risks accelerating the production decline seen since last year. In the short term, unpaid contractors may halt work, reducing immediate output. In the longer term, the company’s credibility as a payer will weigh on its ability to attract private investment, particularly under the government’s new “mixed contracts” scheme, which aims to bring in external partners. Large-scale upstream projects typically take at least three years to develop, meaning current payment issues could ripple into future production capacity.

Muñoz also pointed to recent moves by the federal government to shore up Pemex’s finances. She described the measure as a first step toward a more structural solution for Pemex’s chronic liquidity issues. Looking ahead, Moody’s will be watching for a “second stage” of government support in the second half of the year, particularly to address debt maturities in 2026, estimated at around US$13 billion, given Pemex’s lack of access to bank refinancing.

Moody’s rates Pemex at B3 with a negative outlook, reflecting the risk of a potential distressed debt exchange if the company were to swap Mexican sovereign bonds for Pemex notes. While Muñoz believes the probability of such an event is relatively low, under 3%, uncertainty over the scope and timing of future federal aid remains a central risk.

“The key questions for the rest of the year,” she said, “are how Pemex uses the US$12 billion from the pick-up issuance, and what additional strategy the government will roll out to help the company navigate its upcoming cash needs.”

The NOC’s investment efforts during the first half of 2025 have focused heavily on upstream and refining operations. As of June 30, PEMEX had exercised MX$144.9 billion in budgeted investment, representing 68.4%of the total MX$211.8 billion allocated for the year. These resources have been directed primarily toward hydrocarbon extraction and refinery operations, with a continued emphasis on accelerating the development of new fields to offset declines in mature production areas. Investment has also targeted the ongoing refinery rehabilitation plan, aimed at improving operational reliability and increasing the volume of crude processed for the domestic fuel market. 

On the capital expenditure (CAPEX) front, PEMEX has exercised 71% of its approved MX$125.9 billion (US$6.2 billion) budget, spending MX$89.4 billion (roughly US$4.5 billion) by midyear. The pace of spending underscores the NOC’s effort to maintain operational momentum, even as liquidity constraints and supplier debts loom large.

Natural gas production remained flat year-over-year at 4.531Bcf/d, although it represented a 2.8% increase compared to 1Q25 levels of 4.408Bcf/d.

Pemex’s refining operations saw improvement. Crude processing averaged 987Mb/d in 2Q25, a 10.9% increase from 2Q24. The company attributed the gain to continued operations at the National Refining System (SNR) and the partial commissioning of two trains at the new Olmeca refinery.

Carbon dioxide equivalent emissions saw a 20.7% increase reaching 17.5MMt compared to 2Q24. According to PEMEX, this is mostly due to temporary failures in the steam supply for cogeneration processes at a gas processing complex that led to extraordinary gas flows to flare stacks and reiterated that efforts are underway to normalize this process. Methane emissions also increased, reaching 211MT, a 41.5% increase over 2Q24. This was driven by the incomplete combustion of methane in flare stacks during gas processing.

As PEMEX enters the second half of 2025, its fiscal outlook remains highly dependent on the success of federal financial support and its ability to stabilize supplier relationships while managing a shifting production landscape.