Pemex More Than Triples Loss as AMLO Fails to Revive Output

Petroleos Mexicanos reported $9.4 billion in losses in the final quarter of last year as the state oil giant fails to revive sinking oil production and scrambles to fund its mountain of debt.

(Bloomberg) — Petroleos Mexicanos reported $9.4 billion in losses in the final quarter of last year as the state oil giant fails to revive sinking oil production and scrambles to fund its mountain of debt.

The Mexican state oil company said Monday it had a fourth-quarter net loss of 172.4 billion pesos ($9.4 billion) compared with a net loss of 52 billion pesos in the third quarter, once again foregoing profits at a time when many major oil companies are raking in record billions.

Mexico’s oil output fell to 1.62 million barrels a day last year, marking the third year out of four years of President Andres Manuel Lopez Obrador’s presidency in which crude production has declined, according to data from the National Hydrocarbons Commission. The president promised a turn around at the state oil giant by focusing on easier-to-reach shallow-water and onshore fields but the strategy has failed to bear fruit.

At the same time, Pemex is struggling to pay down debts that have risen to the highest of any oil major in the world, at $107.7 billion at the end of 2022. It must find the means to pay for about $8 billion in maturing debt this year. The government has provided about $45 billion to Pemex in capital injections, tax breaks and other schemes since 2019 and could step in if necessary.

Bloomberg reported last week that Pemex is in talks with Goldman Sachs Group Inc. and JPMorgan Chase & Co. for at least $1 billion in collateralized debt. It comes after Pemex issued $2 billion in 10-year bonds in January that were among the most expensive new debt of the year. While the high cost can be partially explained by current global credit conditions, the fact that the driller tapped international capital markets at all underscores its troubles.

Pemex also faces increasing scrutiny on its environmental, social and governance, track record and could have difficulty drumming up the loans it needs from banks that are increasing their ESG requirements for financing.

The company has indicated it will focus on reducing greenhouse gas emissions and methane from flaring excess gas, as well as its safety record. Yet three fires at separate facilities last week that resulted in four workers’ deaths bode poorly for the struggling state oil giant.

The company reported a 1% rise in crude and condensate output in the fourth quarter compared to the previous one. Yet much of this can be contributed to higher levels of condensate, a light hydrocarbon mixed with crude. By contrast, heavy and lighter grades fell during the year.

(Updates financial debt in fifth paragraph and production in final paragraph.)

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