Pemex is the most indebted oil company in the world and the ninth most indebted company in the world considering all sectors, according to an OECD report.
Its debt currently stands at around 10% of Mexican GDP.
Contingent liabilities for pensions are also important, since they amount to 6.7% of GDP.
The authorities intend to strengthen energy security and build an energy system more resistant to natural disasters.
With this objective, Pemex’s scope is being expanded by boosting production and increasing refining activities, particularly through the construction of a new refinery.
From the perspective of the OECD, this strategy could generate higher operating losses in refining in the short and medium term, which would imply additional risks for the State.
In general, the OECD reports that market participants continue to consider Pemex (the state oil and gas company) to be an important contingent liability for the State.
Pemex has limited access to markets and there is a firm commitment from the government to continue supporting it through capital injections, tax breaks and debt service. Currently, such support amounts to approximately 1% of GDP.
The company‘s production increased in 2020, after having fallen 4% on average during the previous 14 years.
After the recent reduction in its tax burden, Pemex will also have more room to increase investment.
However, additional changes in its business strategy, with more emphasis on financial objectives and the search for greater efficiency, would ease the burden borne by the State.
According to the OECD, this would be facilitated by the concentration of production in profitable deposits and the reconsideration of loss-making lines of business.
Reducing public subsidies for the use of fuel oil by Pemex and the public electricity company, and reallocating those resources in support of investment in Pemex to reduce fuel oil production, would support the transition to a cleaner energy sector.
This could have a marked impact in regions highly dependent on oil, such as Campeche or Tabasco.
Promoting requalification and education plans for the affected workers in these regions would allow them to acquire new skills and facilitate their transition to other economic sectors, avoiding periods of long-term unemployment, believes the OECD.