By KELIN DILLON
According to the new 2023-2027 Business Plan Report presented by Mexico’s state-owned oil company Petróleos Mexicanos (Pemex), Pemex must pay back more than $16.7 billion in debt amortizations before the end of Mexican President Andrés Manuel López Obrador’s (AMLO) six-year term, which is set to end in 2024.
The report revealed that Pemex was able to put off some of its debt to a later date, as 25 percent of its debt was formerly set to be resolved between 2019 and 2021.
“However, during 2021, liability management operations were carried out considering the debt repayment curve in order to reduce pressures in the short term and smooth the curve to avoid accumulations that could represent significant constraints on future budgets of the company,” said the 2023-2027 Business Plan, which went on to note that Pemex will only be liable to pay 16 percent of the remaining debt throughout the last two years of AMLO’s presidency.
That being said, Pemex’s recent debt mitigation will require the company to pay 35 percent of its debt off across the six-year term of Mexico’s next president, meaning it will be liable for the payment of $35 billion between 2025 and 2030.
The remainder of Pemex’s debt will be able to be paid off in the years to follow, though the 2023-2027 Business Plan has outlined that at least $24.5 will be paid off after 2037.
Pemex General Director Octavio Romero Oropeza also announced that Pemex would have to pay off between $5.5 and $6 billion of debt in the first quarter of 2023, a task the Pemex leader requested the assistance of Mexico’s Secretariat of Finance (SHCP) to complete.
“Since last year we have been talking with the SHCP and looking for alternatives on how we are going to resolve this amortization payment,” explained Romero during López Obrador’s daily morning press conference. “We are contemplating that in 2023 the price of crude oil will be quite good. We are looking at alternatives, jointly, and we see no problem with the debt payment. We already have several solution alternatives, and we are going to move forward.”
“Last year, the SHCP helped us in January, February and March, but given that the conditions for the price of crude oil were very good and the increase in production was significant, Pemex was in a position to take care of the operations with its own flow amortizations for the rest of the months of the year,” continued Romero.
Oil sector experts have noted that much of Pemex’s accrued debt is related to the multi-billion-dollar construction of the controversial Dos Bocas oil refinery in Tabasco, which has continually surpassed its allotted budget and experienced numerous building delays.
“The spending that is being done in refining is the typical cliché of throwing good money after bad, since Pemex has never been a good refiner, and we have no reason to think that it will be, nor do we know if the project will be profitable,” Brilliant Energy Director Miriam Grunstein told daily Mexican newspaper El Financiero.
Meanwhile, the leader of energy projects at the Mexican Institute for Competitiveness (IMCO) Oscar Ocampo noted that the SHCP has helped Pemex out with approximately 810 billion pesos in aid over the past few years to finance Dos Bocas, the purchase of the Texan Deer Park refinery and Pemex’s debt amortization.
“This cannot go on indefinitely, and I think we have reached a point where Pemex has to take responsibility for its own debt,” said Ocampo. “In principle, Pemex would not have the reason to not have the resources to pay for it, but it is necessary that it prioritize its most profitable areas. At this time, Pemex has to take responsibility for its debt, not the SHCP.”
Other industry specialists went on to note that Pemex is likely to be able to handle 10 percent of its debt payments through crude oil sales, while 20 percent of debt amortization will continue to come from the SHCP, and the remaining 70 percent of the debt will need to be refinanced to defer Pemex’s payments until a later date.
All in all, Pemex is assumed to have a total of $105 billion in debt to be paid off, 86 percent of which is external, while the remaining 14 percent of debt is internal.