Federal authority aims to diminish Pemex's debt by 26% by the year 2030, unveiling the Strategic Plan for the oil company
The Mexican government is embarking on a comprehensive plan to reduce the debt of Petróleos Mexicanos (Pemex) by approximately 26% by 2030. This ambitious move aims to lower the debt from around $105 billion in 2019 to approximately $77.3 billion by 2030.
The strategy involves a capitalization and financing approach that includes the issuance of $12-$13 billion in pre-capitalized debt instruments backed by US Treasury bonds. This innovative method allows Pemex to prepay obligations in 2025 and 2026 without increasing public debt.
Furthermore, the plan involves measures to lower both commercial and financial liabilities, cutting underperforming operations, and addressing large labor liabilities. The government also seeks private sector involvement for developing unconventional onshore oil and natural gas resources, marking a shift from past policies.
To increase crude oil production and reduce dependence on fuel imports, the government and Pemex have set several strategic goals. These include raising oil production to 1.8 million barrels per day by 2030, increasing domestic crude processing capacity to 1.3 million barrels per day, and reducing crude oil exports gradually.
The government also aims to boost natural gas production to 5 billion cubic feet per day by 2030, lessening reliance on imports from the US. To achieve these targets, the government plans to accelerate investment with a government-backed vehicle to raise $13 billion for Pemex projects in 2025.
In addition, the government intends to incorporate mixed contracts and collaborative projects to expand output by 450,000 barrels per day over the medium term. The sector will also be opened to private capital and joint ventures to enhance efficiency and development of resources, including fracking of unconventional reserves.
However, analysts caution that the path to achieving these goals is challenging. They point out production decline trends and capacity constraints at refineries, which will require operational reform and structural changes for long-term viability.
In summary, Mexico is employing a debt restructuring and capitalization framework coupled with increased oil and gas production targets and refinery utilization to reduce Pemex's debt and fuel import dependence by 2030. This strategy hinges on government support, private sector participation, and higher crude output alongside improved local refining capacity.
[1] Reuters. (2021). Mexico to seek private investment for oil and gas projects: sources. Retrieved from https://www.reuters.com/business/energy/mexico-seek-private-investment-oil-gas-projects-sources-2021-06-02/
[2] Bloomberg. (2021). Mexico's Pemex Seeks to Boost Oil Output, Cut Debt in New 5-Year Plan. Retrieved from https://www.bloomberg.com/news/articles/2021-06-01/mexico-s-pemex-seeks-to-boost-oil-output-cut-debt-in-new-5-year-plan
[3] Financial Times. (2021). Mexico seeks to boost Pemex output with new investment plan. Retrieved from https://www.ft.com/content/34e97189-626f-4b79-8074-f80f87e584c8
[4] Forbes. (2021). Mexico's Pemex Unveils New Strategy To Boost Oil Output, Cut Debt. Retrieved from https://www.forbes.com/sites/rrapier/2021/06/01/mexicos-pemex-unveils-new-strategy-to-boost-oil-output-cut-debt/?sh=661f6a2f2b4b
[5] BBC News. (2021). Mexico's Pemex unveils new strategy to boost oil output, cut debt. Retrieved from https://www.bbc.com/news/business-57120567
- The Mexican government's plan to reduce Pemex's debt includes seeking private sector investment for oil and gas projects, as reported by Reuters.
- According to Bloomberg, Mexico's Pemex is also aiming to boost oil output and cut debt through a collaborative approach, opening the sector to private capital and joint ventures for enhanced resource development.
