Pemex Turning the tanker

4/23/2016 The Economist 

Oil barrelsTHE radio in the office of José Antonio González is tuned to one of the American classical-music stations that he loves. The sounds may be relaxing, but the firm Mr González has led since February—Pemex, Mexico’s state-owned oil company—is in crisis. On April 13th the Mexican government was forced to respond to the firm’s troubled finances with a 73.5 billion peso ($4.2 billion) aid package and a 50 billion peso tax cut. This week Mr González headed to New York to soothe the fears of banks and rating agencies.

They will take some persuading. Pemex’s crude production fell last year to 2.3m barrels a day, down from a peak of 3.4m in 2004. Next year, says the finance ministry, that will probably fall to 2m—“a disaster”, says Adrián Lajous, a former Pemex chief. After taxes and royalties the company made a loss of 522 billion pesos last year. In March Moody’s cut Pemex’s credit rating by two notches to its lowest investment grade. More bad news followed on April 20th when several workers died in a blast at a Pemex facility.

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Mexico’s Pemex puts blast death toll at 24, blames leak

04/21/2016 Reuters

GULF of MEXICO - Gas from the damaged Deepwater Horizon wellhead is burned by the drillship Discoverer Enterprise May 16, 2010, in a process known as flaring.  Gas and oil from the wellhead are being brought to the surface via a tube that was placed inside the damaged pipe.  U.S. Coast Guard photo by Petty Officer 3rd Class Patrick Kelley.
Photo by Petty Officer 3rd Class Patrick Kelley.

Twenty-four people died after a leak caused a deadly petrochemical plant blast, and the death toll could still rise, Mexican oil giant Pemex said on Thursday, the latest in a series of fatal accidents to batter the company.

Pemex CEO Jose Antonio Gonzalez Anaya, who traveled to the site of Wednesday’s blast near the port of Coatzacoalcos, one of Pemex’s top oil export hubs, told local television it was unclear what caused the accident.

The massive explosion at the facility’s chlorinate 3 plant in the Gulf state of Veracruz also injured 136 people, 13 of them seriously. Another 18 people were unaccounted for, and one badly damaged part of the plant had yet to be scoured.

“We know there was a leak, what we don’t know is why, but everything points to an accident,” Gonzalez Anaya said.

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Mexico explosion: Families demand answers over deadly blast

4/22/16 BBC News

5337912858_1b19aea036_mRelatives of workers inside a petrochemical plant that exploded in Mexico are demanding answers from managers over what happened.

The blast hit the facility in the southern city of Coatzacoalcos in Veracruz state on Wednesday. The cause of the explosion is unclear.

The death toll reached 24 on Thursday, with another 13 still seriously hurt.

Dozens of family members gathered near the gates of the plant to demand talks with plant bosses.

Some tried to force their way into the compound, the Associated Press news agency reported.

Mexico’s state oil company Pemex raised the death toll late on Wednesday, and said 19 people remained in hospital.

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Pemex Isn’t Mexico’s Only Debt Problem as States Owe $28 Billion

4/19/16 Bloomberg Business

14238061995_8018a2dc0e_mMexico’s debt-laden oil producer has largely dominated investors’ attention in recent months because of the threat it poses to the government. But that’s not the only potential debt crisis facing the nation.

States including Veracruz, Nayarit and Zacatecas are drowning in red ink after racking up about $28 billion in obligations, the most in two decades. Their finances are about to deteriorate even further as many governors ratchet up spending to bolster their chances of winning elections in June, according to Moody’s Investors Service analyst Francisco Vazquez. On April 1, the ratings company lowered the outlook for all but one of Mexico’s 31 states to negative.

“A state crisis is coming,” said Rodolfo Navarrete, a Mexico City-based analyst at Vector Casa de Bolsa, and the most accurate Mexico economic forecaster according to data compiled by Bloomberg. “I expect state governments will look for more financing, either by trying to increase transfers from the federal government or by raising bank debt. This will increase public-sector debt,” which could affect the nation’s credit rating.

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Mexico forced to rescue drowning oil giant Pemex

4/14/2016 CNNMoney

14238061995_8018a2dc0e_mPemex, as the oil giant is known, is suffering from a steep decline in production that has been exacerbated by the crash in crude. Years of losses have left Pemex with huge unfunded pension liabilities and on the hook for billions to suppliers.

Things are so bad that this week the Mexican government had to come to the rescue with $4.4 billion in aid for its former cash cow. More financial assistance could be needed soon. That’s not good considering the government relies on Pemex to pay for about a fifth of its budget.

“This is just papering over the cracks considering Pemex’s problems,” said Edward Glossop, emerging markets economist at Capital Economics. “Pemex’s struggles have been very negative for Mexico’s public finances.”

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Mexico Government to Support Pemex With $4.2 Billion

4/13/2016 The Wall Street Journal


MEXICO CITY—Mexico’s government said Wednesday it will support troubled state-oil firm Petróleos Mexicanos, or Pemex, with $4.2 billion in fresh capital and money to make this year’s pension payments, a step some analysts saw as insufficient if oil prices remain low.

Depressed oil prices and declining oil production have led to a liquidity crunch in recent months for Pemex, Mexico’s largest company by sales and the world’s eighth-largest oil producer. The move was widely expected after the government repeatedly said it would provide financial support to Pemex, which contributes nearly 20% of the federal budget.

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Mexico Has $13.6 Billion Surplus to Pay Debt, Boost Oil Fund

4/12/16 Bloomberg

Oil barrelsMexico will use $13.6 billion from a central bank surplus to pay down debt and boost its rainy day fund, shoring up finances as it prepares a support plan for the beleaguered state oil company Petroleos Mexicanos.

The Finance Ministry will spend 167 billion pesos ($9.5 billion) of the transfer to buy back debt and reduce bond issuance this year, while 70 billion pesos will go to boost the nation’s budget revenue stabilization fund. A plan to help Pemex will be released in coming days, the ministry said in a statement released after the central bank disclosed the surplus.

The government’s response comes after Pemex reported a record $32 billion-loss for 2015, which prompted Moody’s Investors Service to cut its credit rating two notches in March. Finance Ministry officials have repeatedly said that they could give Pemex a capital injection once the company presents a credible business plan.

“What is important is not the funds that you transfer to Pemex, but the quid pro quo for receiving those funds,” said  Alberto Ramos, the chief Latin America economist at Goldman  Sachs Group Inc., in a telephone interview. “If that leads to a leaner and meaner company, I think that’s understandable. Pemex needs to adjust to the new oil price reality and to the more competitive sector.”

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