Pemex seeks US$2bn tax deferral to ease debt burden – report

Mexico’s government is expected to defer the payment of US$2bn in tax by embattled oil and gas giant Pemex to help the firm address its debts.

Finance undersecretary Gabriel Yorio has committed to help free up company resources so Pemex can pay its short-term debt commitments, according to a Reuters report.

Pemex is scheduled to pay back US$8.5bn to its creditors in 2023, with most of that sum being due in the first quarter. According to Yorio, Pemex has already shelled out US$6bn and is hard-pressed to come up with the remainder.

The new strategy would therefore delay US$2bn in payments due under the right of shared profit tax (DUC), relieving pressure on the company’s cash flow, Yorio said.

The government of President Andrés Manuel López Obrador has long covered a portion of Pemex's debt payments via the public treasury to help the company liberate funds for new investment. Direct support was suspended in early 2022 amid high international crude prices. It has also reduced the Pemex DUC tax progressively since 2020.

READ: The case for a Pemex IPO

Yorio’s comments suggest the government will not directly support Pemex via transfers this year, despite pleas made by the Pemex leadership last December.

While Pemex made a profit last year, CEO Octavio Romero Oropeza said at the time that the company was financially strained due to its heavy debt burden, which was some US$104bn at the end of last year.

Liquidity problems have also translated into climbing debts with suppliers and contractors, which at the end of March totaled 96bn pesos (US$5.3bn), up 88% compared with the same month of 2022.

The company said earlier this week it was looking for a new mechanism to pay back suppliers. Last year, it unveiled a strategy focused on exchanging up to US$2bn in debt to suppliers for debt securities with an 8.75% coupon and maturity set for 2029.

The national oil firm's commitments to its contractors and service providers made up 29% of its short-term commitments as of the end of 2022, the company said in its latest financial results presentation.

It has also sought new international debt refinancing operations with US lenders, according to Bloomberg.

Pemex's annual debt commitments are expected to climb to US$8.7bn in 2024, before dropping to US$4.6bn in 2025 and rising again in 2026 to US$8.2bn. 

The company is in the midst of a large investment push in its upstream activities, where it expects to develop two large fields per year over the next half-decade. It has committed to heavy investments in fields such as Pokche, Akal, Zama, Macuil, Kayab, Pit and Tlaltivak, as well as Ixachi and Quesqui.