Pemex Evaluates Debt-Payment Alternatives With Finance Ministry Amid Weak Production

Bloomberg — Mexico’s Petróleos Mexicanos is evaluating debt payment options with the Finance Ministry as the company struggles to convert high oil prices into profits amid weak production and a focus on refining instead of exporting its crude.

Pemex Chief Executive Officer Octavio Romero Oropeza said he’s been in talks with the Finance Ministry since the last quarter of 2022 to find an option for Pemex to pay its maturing debt because the amortizations aren’t included in the budget. He noted that high oil prices could enable Pemex to find alternatives.

“We already have several alternative solutions,” he said during the president’s daily press conference on Wednesday, adding that Pemex has between $5.5 billion and $6 billion in debt amortizations due in the first quarter.

Pemex is the world’s most indebted oil major, with financial debt of $105 billion. It is under enormous financial strain as the Mexican government wants it to halt oil exports and invest in loss-making refineries, even as it struggles — and fails—  to reverse long-term oil production declines.

President Andres Manuel Lopez Obrador said that the government would step in to help pay Pemex’s debt if needed.

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Bloomberg reported on Tuesday that Mexico’s Finance Ministry expects Pemex to pay debt coming due in the first quarter without government help, according to people with knowledge of the situation. After providing the oil company with financial support in recent years, the Finance Ministry now wants Pemex to foot the bill itself unless it doesn’t have enough cash to do so by the end of the quarter, one of the people said.

Romero said on Wednesday that Pemex has been decreasing its debt. “We are managing that debt hand-in-hand with the federal government and the Finance Ministry.”

Pemex’s bonds due 2050 were up almost one cent on the dollar to 71 cents at 10:03 am in New York, according to Trace data.

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