MEXICO CITY (Reuters) - Mexico’s state oil company Pemex plans to maintain crude production levels even as the coronavirus pandemic knocks down demand and a price war between global oil producing powerhouses shakes up markets around the world.
The company, formally known as Petroleos Mexicanos, said in a statement to the stock exchange that its fuel storage terminals have enough inventory to satisfy domestic demand, and it is implementing a business continuity plan to guarantee distribution of supplies.
Global oil benchmarks ended a volatile quarter on Tuesday with their biggest losses in history, dragging down prices of other crude grades like Mexico’s flagship Maya, which is indexed to Brent and WTI at East Houston.
Maya crude for delivery at the U.S. Gulf Coast gained $1.22 per barrel to close at $10.46 per barrel on Tuesday, according to S&P Global Platts, while the country’s oil exports basket rose to $10.76 per barrel.
But recent increases have not been enough to offset the decline accumulated this month, which has left many Latin American crudes languishing at single-digit prices. Some panicked producers have decided to continue exporting, even at a loss.
Highly indebted Pemex is this year entering its 15th year of oil production decline, while trying to curb growing fuel imports that put pressure on the nation’s energy trade balance.
Falling crude prices are not helping it to overcome imbalances. Mexico’s Maya averaged some $23.40 per barrel in March, half of its previous month’s value, according to Reuters calculations based on Platts’ data.
(Graphic tracking Mexico's oil price reut.rs/3axFfEX)
Mexican President Andres Manuel Lopez Obrador said on Tuesday that he had called on G20 member countries to avoid tax impositions and commercial monopolies, while seeking an agreement over crude prices.
“Crude prices have plummeted in a way we had not seen in recent times, I think in over 20 years,” he said.
Meanwhile Pemex said in its statement that its business continuity plan to cope with the coronavirus crisis would prioritize worker safety. It has reduced its labor force in an orderly fashion, using a shift system and remote working, it said.
Reporting by Stefanie Eschenbacher and Marianna Parraga; Editing by David Alire Garcia and Richard Pullin