Mexico's Pemex in talks with government for new debt support

Octavio Romero, Pemex Chief Executive Officer, attends an interview in Mexico City
Octavio Romero, Pemex Chief Executive Officer, gestures during an interview with Reuters at the headquarters of state-owned oil company Pemex in Mexico City, Mexico, July 28, 2022. REUTERS/Edgard Garrido

VILLAHERMOSA, Mexico, Dec 14 (Reuters) - Mexican state oil company Petroleos Mexicanos (Pemex) is in talks with the government about getting fresh support to pay debt falling due in early 2023, Chief Executive Octavio Romero said.

The government had already taken on Pemex debt amortizations in 2021 to help the company invest. However, it stopped after the first quarter of 2022 amid high crude oil prices.

"We're in talks with the finance ministry, especially for the first quarter of next year, where we have strong amortizations," Romero told reporters on Tuesday.

"Even though the (oil) price has been very good in previous months, there came a point where we didn't see it coming," he added when asked about the company's debt.

The talks underscore Pemex's dependence on government support even as a period of higher oil prices has helped swell profits at international oil majors.

Pemex Chief Financial Officer Carlos Cortez said amortizations in the first quarter are about $4 billion.

In the past, Pemex, with financial debt of $105 billion in the third quarter, has received other government support like capital injections and reductions in its tax burden.

Cortez said the prospect of new reductions was "complicated" and that the tax burden had likely bottomed out at a rate of 40%.

Pemex reported a net loss of 52 billion pesos ($2.64 billion) in the third quarter due to a rise in the cost of sales and foreign exchange losses, though revenues increased 56.5% year-on-year.

Romero, a close ally of President Andres Manuel Lopez Obrador, said Pemex should close 2022 with profits and oil production of 1.9 million barrels per day (bpd), and said in 2023 the company would reach 2 million bpd.

"When I tell them we're going to reach ... a higher production figure next year, it's because we're in full development of Quesqui and Ixachi of Tupilco," Romero said, referring to major oil fields.

There are plans to accelerate drilling of several wells in those areas before 2022 ends "which gives us certainty there will be an increase in production next year."


Pemex wants to increase crude production, though it has changed focus from the export market. Instead, it aims to increase fuel production and comply with Lopez Obrador's mandate to achieve self-sufficiency in gasoline.

To that end, Pemex is building a new refinery in Dos Bocas, Tabasco state, and has acquired another from its partner in Deer Park, Texas, oil company Shell (SHEL.L).

Pemex marketing director Alberto Velazquez said that currently 25% of Deer Park's total gasoline and diesel production goes to Mexico and that these percentages are growing by the month.

He estimated that, if required, Pemex could send nearly all of Deer Park's fuel production to Mexico by the first half of 2024.

According to data presented by Pemex, Deer Park processes 284,000 bpd of crude oil and produces 104,000 bpd of gasoline.

"All the adjustments are being made. The idea is that by the first half of 2024 practically the entire production of Deer Park will be available, either through the Brownsville-Reynosa pipeline or by ship," Velazquez said, noting that it will depend on the cost of the logistics to move the product from Deer Park.

Gasoline could be taken to the border area between Mexico and the United States, he said.

($1 = 19.6951 Mexican pesos)

Reporting by Adriana Barrera; Editing by Cassandra Garrison and Jonathan Oatis

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