The enormous debt of Mexico’s state oil firm Pemex has not increased since the new administration took office in December 2018, and will not increase in the future, Mexican President Andrés Manuel López Obrador said on Friday.
“The debt hasn’t grown during our time, and it’s not going to grow,” Reuters quoted López Obrador as saying at a press conference.
The Mexican state oil firm has a total of US$106 billion in financial debt, which makes it the world’s most indebted oil company.
Left-wing President López Obrador—in office since December 1—wants a greater role for Pemex in reversing the downward trend in Mexican oil production.
Pemex’s crude oil production has declined in recent years—according to Pemex figures, its crude oil production averaged 1.813 million bpd in 2018. To compare, Pemex’s crude oil production averaged 2.429 million bpd in 2014, falling to 1.948 million bpd in 2017.
Apart from boosting oil production and Pemex’s role in Mexico, López Obrador bets on a major new oil refinery as part of his goal for “energy independence.”
Last week, Mexico scrapped plans to tender the construction of the refinery to foreign companies, saying that it would be Pemex that will oversee the project. According to López Obrador, the foreign firms won’t be able to meet the government deadline to have the project ready by 2022 and weren’t happy with the US$8-billion price tag.
“The company has secured the financial, technical, human and material resources necessary to complete the project,” Pemex said in a statement last week. According to Pemex and López Obrador, the entire project will cost US$8.3 billion (160 billion Mexican pesos) and will create 100,000 jobs. Construction is scheduled to begin on June 2 this year and is expected to conclude in May 2022.
Analysts, however, doubt that Mexico could complete the project on time and on budget, which could put additional strain on government and Pemex finances.
According to Moody’s, the project is expected to exceed the planned budget—in a big way, because of Mexico’s “limited know-how” in such large-scale ventures.