Petróleos Mexicanos needs capital. The state oil company has approached Goldman Sachs and JP Morgan for at least $1,000 million in funding. According to Bloomberg, the agreement with Goldman Sachs relates to crude oil, while the semi-sovereign is trying to strike a deal with JP Morgan that will allow it to receive cash tied to the sale of its gasoline. The oil company’s debt is about $105 billion, of which 20% is short-term and 80% is long-term. With liquidity needed to meet about $10,000 million in outstanding payments this year, the Mexican oil company has already resorted to selling bonds to refinance its debt. In a restrictive environment with high interest rates, however, financing is likely to be very expensive. Although that newspaper contacted the oil company for more details, it received no response.
The Mexican oil company’s liquidity needs were evident earlier this year when it placed $2 billion worth of 10-year notes, despite having one of the highest yields of any security sold that year. The yield offered by Pemex was 10.375%, nearly double the yield on a Mexican government bond of the same maturity, which was then trading at 5.64%, and much higher than the yield offered by the same maturity. The oil major offered a bond issue in October 2020 when the yield was around 7%.
Since the beginning of this government, she has supported the state oil company in restructuring its finances. The federal government has transferred capital contributions of about 108,000 million pesos, and although Pemex has assumed full service of its debt since last April, the President has said without further elaboration that debt payments for this year are guaranteed. “We have supported Pemex and will continue to do so because it is the rescue of the most important public company in our country, it is one of the most important companies in the world in the oil sector,” he said.
Fluvio Ruíz, a former director of the oil company, explains that Pemex’s search for banks complements the financial support it will receive from the Ministry of Finance, although he acknowledges that it will be expensive financing given the current restrictive cycle. “The general trend in interest rates points to higher financing costs and short-term loans are always very expensive. At that point, servicing the debt will certainly become more expensive,” he comments.
The energy sector analyst points out that given this financial weakness, there is an urgent need for the government to push ahead with tax reform in favor of the oil company and the Hydrocarbon Revenue Act. Ruiz also warns that the country must examine the possibility of part of Pemex’s debt being considered sovereign debt: “It’s a possibility that needs to be explored, it’s an option that shouldn’t be ruled out,” he concludes .
In December 2022, Pemex had its worst production in its history at 1.5 million barrels per day, the lowest number since statistical records became available in 1984. In the third quarter of 2022, the oil company reported a net profit loss of 52,033 million pesos (about $2,584 million ) in the July-September 2022 period, a setback compared to the net gains of over 253,000 million pesos accumulated from January-June last year.
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