When you’re up to your…
Brent Crude prices have held…
The Mexican government plans to use money from a public income stabilization fund to help reduce the sizeable debt pile that state energy major Pemex has accumulated.
Reuters reports, quoting the country’s deputy finance minister, that the fund is worth US$15.4 billion and the government plans to make it “counter cyclical.”
“We’d like to design it as a counter cyclical fund, like the copper funds in Chile are designed, where the resources are used not when the government wants to, but when the economy makes them necessary... In times of abundance, you put money into these resources,” Arturo Herrera said, adding “As a second part of the fund, we’d like to use it to pay some of the debt obligations that Pemex has.”
The state company has around US$16 billion in bond payments due by the end of 2020, but its total debt is over US$100 billion. In an effort to slim this down, earlier this year the Obrador administration said it would inject US$3.6 billion into the company in the form of debt refinancing and tax cuts.
The injection should also help Pemex boost local oil and gas production as a means of improving revenues and income despite a suspension of new oil and gas block tenders while the administration reviews the contracts the Pena-Nieto government signed with foreign oil companies in a bid to reverse a consistent decline in production.
Related: U.S. ‘’Oil Weapon’’ Could Change Geopolitics Forever
President Andres Manuel Lopez Obrador has promised that by the end of his term in office, Mexico will produce almost 2.5 million bpd of crude – a level close to the 2013 average of 2.522 million bpd and considerably higher than Mexico’s current average of less than 1.7 million bpd.
As part of the production decline reversal plan, Pemex also increased its spending plans for this year. In December, the company said it had budgeted US$23 billion for 2019, up by 15 percent on 2018. Half of the total will be directed towards exploration and production, with some onshore deposits also benefitting from the investment alongside shallow-water blocks.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.