Pemex Debt Crisis: Mexico’s state energy company, Pemex, finds itself entangled in a mounting debt crisis, surpassing $17 billion, with repercussions that extend beyond its financial standing. The debt, coupled with the reluctance to pay, has triggered warnings from industry groups, including Amexhi and Amespac, about the potential threat to oil production, ongoing projects, and even the viability of suppliers.
Amexhi, representing local and foreign companies, penned a letter to the government, expressing concern over the “critical situation” arising from Pemex’s debt. The letter, addressed to Energy Minister Miguel Angel Maciel and Finance Minister Rogelio Ramirez de la O, emphasized the gravity of the situation and called for prompt government intervention. Industry insiders, including some of the world’s largest oil service companies, echoed these concerns, urging Pemex to settle at least a portion of its outstanding debt by December 15 to avert severe consequences.
Pemex’s debt report reveals not only financial obligations of over $105 billion but also unpaid amounts totaling 297 billion pesos ($17.22 billion) owed to local and foreign companies. The delay in payments has prompted warnings of a potential severe impact on hydrocarbon production in Mexico.
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Major oil service companies, including Halliburton, SLB (formerly Schlumberger), and Baker Hughes, have faced payment delays from Pemex, exacerbating concerns about the financial stability of these key players in the industry. While SLB confirmed experiencing payment delays without naming the debtor, Halliburton and Baker Hughes have yet to provide immediate comments.
Pemex’s financial struggles have unfolded against the backdrop of President Andres Manuel Lopez Obrador‘s administration, which has injected over $70 billion in cash and provided tax breaks to support the state energy company. The debt report also discloses substantial amounts owed to private oil producers, such as Fieldwood Energy and Hokchi Energy, highlighting the interconnected nature of the industry.
As the debt crisis deepens, the viability of alternative options for operators remains limited, with Pemex being the primary customer for most. The repercussions of delayed payments extend beyond financial strain, impacting ongoing projects and the very survival of suppliers. With calls for government intervention intensifying, Mexico’s energy landscape faces a critical juncture with Pemex’s debt crisis at the forefront of industry concerns.
Our Reader’s Queries
Why is Pemex in Mexico in trouble?
For years, Pemex has grappled with a weighty tax load. Any past assistance, such as monetary infusions and tax reductions, has primarily been directed towards sustaining the energy company with the highest debt in the world.
How much is Pemex in debt?
According to a report by Fitch, PEMEX, the state energy company with the highest debt in the world, has a whopping US$25 billion in short-term debt and US$4 billion in bonds that are set to mature in 2023. This is a concerning situation for the company, and it remains to be seen how they will address this financial challenge.
What are the financial issues with Pemex?
Fitch believes that Pemex is facing financial difficulties, which is why there is a variation in its performance. The company’s ESG track record is also hindering its ability to raise capital. As of 3Q23, Pemex has a debt of USD105 billion, USD78 billion in PPE, and a negative equity book value of USD90 billion.
Does the US own Pemex?
Pemex, a combination of the words Petróleos Mexicanos, meaning Mexican Petroleum, is a government-run oil company in Mexico. The Mexican government oversees the management and operation of this state-owned enterprise.