Two PEMEX Audits Revealed To The Public
PEMEX’s complicated public position became evident this week when two audits reported different aspects of the NOC’s activities.
The first audit came from the ASF, which is Mexico’s most important auditing body. The ASF reviewed PEMEX’s finances as part of its wider review of all public institutions, called “Public Account 2020”. This public review generated criticism against President López Obrador after reporting millions of pesos in cost overruns and detected irregularities in the delays that have plagued the construction of the Dos Bocas refinery, along with other flagship infrastructure projects. The president minimized the irregularities detected by the ASF by saying that the review “is still preliminary; a work in progress.”
The ASF’s research revealed that PEMEX lost over US$25 billion in 2020, representing an increase of 47 percent in losses compared to 2019. This means the NOC lost almost US$69 million a day during 2020. Mexico’s export mix reached a historically low value of minus 2.4 dollars per barrel in April of 2020, although much larger negative values were common in the market throughout that month. However, the ASF also noted that the federal government implemented relatively effective measures to offset these losses, such as packages of fiscal support for PEMEX whose cumulative effect was the halving of all tax burdens on the NOC.
The ASF recommended refocusing all investments on the upstream segment of the industry’s value chain to guarantee production level increases and profitability, along with a new round of evaluations of all exploration and production projects to make sure that short to medium term value generation is being prioritized.
The second audit came courtesy of Baker Hughes, PEMEX’s long standing contracting partner who came under fire these last two weeks due to its association with corruption allegations made against the son of President López Obrador. To refute these allegations, Baker Hughes hired an external law firm to audit all agreements between the company and the NOC. It announced its findings in a joint press conference with PEMEX this week. The audit concluded that no conflict of interests or irregularities were found in the contracting interactions between Baker Hughes and PEMEX, making it clear that the relationship between the two companies was cleared of the charges made by these accusations. The press conference featured the participation of Baker Hughes Region Leader and Vice President for South America and Mexico Robert Pérez, who said that they had delivered the audit’s full report to PEMEX Director Octavio Romero. To read our latest interview with Perez, click here.