Pemex sees climate risks potentially endangering access to capital

Mexico's national oil company Pemex has identified a risk of a high impact on its finances from a potential climate-linked reduction in capital for oil and gas companies.

In a climate risks report published in the first week of July, the company identified a series of factors that could have a potential negative impact on its finances.

Of the risks with the highest potential impact, it said that without an energy transition plan there was a risk it could no longer access credit lines from financial counterparties and lose the support of investors.

Pemex published its first ESG strategy earlier this year in a bid to maintain the backing of international investors, who are increasingly focused on oil companies' climate strategies. Many large investors do not provide financing to oil companies that do not have an ESG strategy.

Pemex is laboring under a debt burden of more than US$100bn and its bonds are rated junk by the main rating agencies.

In his introduction to the report, CEO Octavio Romero Oropeza said the publication would strengthen the confidence of the company's investors and other stakeholders.

The report identifies other risks with a high potential impact on the company's finances, such as the risk of an increase in demand for low-carbon products. Pemex said this could reduce its share of the energy market and its revenues.

Greater volatility in oil and gas prices and the implementation of carbon pricing mechanisms could also negatively impact Pemex's finances, the report finds.

In July 2023, Pemex's risks committee for the first time categorized climate change as a strategic risk for the company, alongside other long-recognized risks related to production, reserves replacement, corruption and others.

As part of its sustainability plan, by 2050 Pemex aims to produce net zero emissions of greenhouse gases from its operations (scope 1 and 2). By 2030, the company is targeting a 30% reduction in methane emissions compared with 2020.

In 2022, Pemex reduced greenhouse emissions by 2.3% compared with 2021. Methane emissions fell by 4.3% over the same period.

From 2025 to 2030, the company plans to devote 10-14% of its average annual capital expenditure to implementing its sustainability strategy.

Pemex said that, as well as identifying and managing climate-related risks, it is looking for opportunities from the energy transition in business sectors such as carbon capture and storage, green hydrogen, clean power and biofuels.

The full report can be seen in the Documents box in the top-right corner of the screen.