The "rescue" of Pemex promised by the Mexican government a year ago still does not materialize. The state oil company continues to drift, with losses that reached 18,000 million dollars in 2019 - 92% more than in the previous year -, according to data released on Thursday. Revenues also fell to 73,000 million dollars, a decrease of 16% over the previous year. Despite attempts by the Administration of Andrés Manuel López Obrador to stop the decline, the fall in domestic and external production and sales keep the parastatal under water.
The fall in oil production in 2019 widens doubts about Pemex
- López Obrador's disagreement with private oil companies puts Pemex's future at risk
- Pemex, in his maze
Last year, Pemex production fell 7.4%, to 1.7 million barrels per day, when in 2018 the figure was 1.8 million. Pemex insists that in the second half of the year it managed to stop the fall, a fact that the management clings to justify its optimism for 2020. The National Hydrocarbons Commission (CNH), the regulatory body of the sector in the North American country , had already warned of significant delays in the drilling of new deposits. Of the 28 scheduled for 2019, the parastatal only managed to drill three.
The fall was also noticed in the crude processing. In 2019, Pemex processed 592,000 barrels per day, a slight decrease compared to 612,000 the previous year. The oil company attributes it to a refinery rehabilitation program initiated in September. However, the decline had already occurred in the first half of the year. As a result of the drop in crude oil production and the slowdown in the refining process, Mexico exported an average of 81,000 barrels per day less than in 2018.
Faced with the bad results, Pemex asks for patience. Along with the fall in exports, the director of Finance, Alberto Velázquez, pointed out Thursday at a conference call to the decrease in the price of the Mexican mix and said that there will be "a gradual and constant improvement of the financial indicators ". The first year the efforts have focused, according to the manager, on "laying the structural foundations" for a transition with an expected duration of three years. The debt reduction by almost 5%, about 99,000 million pesos of the total balance, is an example of these "advances". However, Pemex remains the most indebted oil company in the world.
The state firm also points to the savings achieved by combating fuel theft. The crusade against this crime, known as huachicol , was the first major challenge faced by the Government after taking possession in December 2018. In that regard, there are reasons for celebration: of an average theft of 56,000 barrels per day in 2018, It was stolen 5,000 last year.
However, the increase in losses shows that the strategy is not enough, according to economist José Luis de la Cruz. "The fight against corruption is not enough: production and operational structure have to be reviewed." The economist also points to a complicated international scenario for this year, now aggravated by the expansion of the coronavirus - with its consequent impact on the price of oil - and its predictable economic impact. "The adverse conditions that were already seen in 2019 are not dissipating."
Losses can also affect the revision of the credit rating of the oil company, according to economist Gonzalo Monroy. "It's a big red alert. The government has to stop thinking about the barrels and focus on profitability. The cost of sales and refining is very high," says the expert, who considers "very likely" a reduction in the rating. If it arrives, that cut would also call into question the credit rating of the Mexican sovereign bond.
The poor results put the Government of López Obrador in a complicated situation, which has made the rescue of the oil company one of its priorities. As soon as he took office, the president compared the task ahead of him with the oil nationalization of 1938 and set the goal of reaching 2.4 million barrels per day by the end of the sexennium in 2024, an objective that experts see every More unlikely
The fragility of Pemex increases pressure on the Government to restore oil rounds and partnerships with companies, established by the former Executive - chaired by Enrique Peña Nieto, of the PRI - to encourage private investment in the sector and increase production. Raised on the back of a promise of "energy sovereignty", the López Obrador Administration canceled both mechanisms because they did not give the expected results.