Pemex claims to put its finances in order

By Pemex

In the framework of the XIV edition of the Mexican Petroleum Congress (CMP), the SPA of the General Directorate of Pemex Exploration and Production and president of the CMP, Ulises Hernández Romano, and the Pemex Corporate Finance Director, Alberto Velázquez García, presented the conference Challenges and perspectives of the finances and operation of Petróleos Mexicanos.

In his speech, Alberto Velázquez recounted the structural problems faced by Pemex at the arrival of the new administration and focused on fuel theft, the high tax burden and the accelerated growth of debt, which created a vicious circle for the company. The foregoing because Pemex stopped investing in new projects in oil fields which caused an acceleration of the fall in oil production.

This new administration went from diagnosis to the implementation of solutions focusing on the gradual reduction of debt starting in 2022, based on higher flows due to the increase in oil production, as well as zero indebtedness for investment projects, the reduction gradual fiscal burden and responsible and transparent management of their income.

He also explained that the administration headed by the CEO, Octavio Romero Oropeza, applies a strict financial discipline based on operational efficiency, the efficiency of spending and the maximization of his income. He stressed that the new Pemex administration demonstrates that a different model of company management based on innovation, efficiency and, above all, without corruption is possible.

Velázquez García commented that the Government of Mexico has taken the historic decision to reduce the tax burden of the company, through a decree published in the Official Gazette of the Federation, through which new fiscal incentives are granted to Pemex.

He also explained that in the period 2019-2021 the tax benefits for the company, through the gradual decrease of the rate of the Right for Shared Utility (DUC) that represents more than 80 percent of the direct tax burden of Pemex, will add a total of 168 thousand 700 million pesos. That is, 30 thousand million pesos in 2019; 47 thousand 100 million pesos in 2020 and 91 thousand 600 pesos in 2021.

For this year, the Government of Mexico also contemplated financial support of capitalization to the state productive enterprise for 25 billion pesos, with the goal that Pemex achieve a sustained recovery of oil production in the next three years.

Regarding debt management, the corporate finance director of Pemex said that the company has the support of national and international banks for the refinancing of its debt and that the agreement reached will be announced shortly.

At the end of December, 20 fields will be producing 70 thousand barrels of oil a day: Ulises Hernández Romano

For his part, Ulises Hernández stressed that Pemex has contemplated an investment of approximately 270 billion pesos for exploration and production, an increase of 38 percent in real terms with respect to 2018, which were focused on maintenance of production and fields in exploration. "This is no longer a plan, they are already projects in execution."

The official said that the execution of both marine and terrestrial infrastructure works, as well as the arrival of two drilling equipment and two more that are on the way, with which the drilling of new wells will begin, allow us to foresee that the 20 new Developments will start production according to the program before the end of this year.

Hernández Romano predicted that production of around 320,000 barrels per day in oil is expected from the combination of the developments and the order of 900 million cubic feet of gas in these deposits.

The increase in exploratory activity will allow Pemex to have a stock of discoveries that could allow a projection of commercial success of between 20 and 40 fields per year at the end of the sexennium, this in order to achieve the goals set by the Federal Government for the rescue of the oil industry and its energy sovereignty.

Finally, Ulises Hernández Romano commented that there is a significant number of fields within a broad portfolio in an advanced stage of exploitation that require secondary or improved recovery processes.

This Pemex release was published using machine translation.