Mexico's Oil Giant Reports Staggering Losses

The past several days have been devastating ones for Mexico’s state-run Pemex, which reported three refinery fires last week that have left two dead and more injured, followed by quarterly reporting that downs a tripling of losses against an impossible level of debt and a stark failure to revive output. 

Pemex released Q4 2022 results on Monday, reporting $9.4 billion in losses in a single quarter, more than triple the losses of the previous quarter. 

According to Bloomberg, Pemex output fell to 1.62 million barrels per day in 2022, the third year that Pemex has reported a decline. 

Simultaneously, debt ballooned to $107.7 billion by year’s end, with $8 billion of that set to mature this year. 

Mexico’s president Andres manuel Lopez Obrador (AMLO) campaigned on promises of reviving Pemex for the national interest; however, while oil companies the world over raked in windfall profits on the back of Russia’s war on Ukraine and sanctions last year, Pemex has moved sharply in the opposite direction.

Government intervention, in the form of $45 billion in capital injections, tax breaks and other machinations has failed to move the needle, according to Bloomberg, and the plan to boost production by moving offshore production to shallower waters and focusing more attention on onshore plays has likewise met with no success.

Pemex is now knocking on the door of Goldman Sachs and JP Morgan for $1-billion in financing to cover outstanding debt this year. Talks between Pemex and the banks are said by Bloomberg to be linked to Pemex’s gasoline sales in Mexico in the form of securitized payments. 

Last Thursday, Pemex saw three fires in one day at three separate facilities that it operates in Mexico and the United States.

By Charles Kennedy for Oilprice.com

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