MOSCOW (MRC) -- Mexico's cash-strapped state oil firm Petroleos Mexicanos (Pemex) is under pressure to resume financial debt repayments despite promises from President Andres Manuel Lopez Obrador that his government would pay them until 2024, said Hydrocarbonprocessing.
Pemex is due to pay some 1 B euros to redeem a 2015 bond. "Pemex will make payment of its maturities this month with its own resources, since the finance ministry did not make capital contributions to the company in April (for that)," said one of the sources, who asked to remain anonymous.
Neither the finance ministry nor Pemex responded to requests for comment. Pemex, one of the world's most-indebted oil companies, has struggled with years of declining crude production and in 2020 lost its coveted investment-grade debt rating.
The source said between May and December Pemex faces outstanding principal and interest payments, mainly related to bonds, worth some USD3.8 B. "The finance ministry notified Pemex about three weeks ago the company had to pay the eurobond, arguing it has more funds due to the increase in ... oil prices," the source added.
Pemex has said it must shoulder peso-denominated financial debt maturities in 2022 worth some USD8.4 B, and another USD15.2 B of debt commitments in other currencies. The ministry has in recent weeks also pressed Pemex to resume amortizations linked mainly to debt issuances, which this year amount to some USD7.5 B, another USD7.4 B in 2023 and USD8.8 B in 2024, the source said.
In 2021, debt amortizations totaled about USD6.4 billion. The second source told Reuters "the additional income from Pemex will be significant, and that allows the company to receive less (government) support", without giving details on how much extra income was expected due to the increase in crude oil prices following Russia's invasion of Ukraine.
Pemex's financial debt closed 2021 at USD109.0 B. Net losses were USD10.9 B last year. Pemex has begun drawing up a refinancing plan for some USD3.5 B in financial debt, anticipating the funds will not come from the government for now, the first source said.
Mexico in January swapped short-term Pemex bonds for a new 10-year bond as part of a scheme to lower debt and reduce medium-term financial pressure on the firm. Mexico's government in 2021 made capital contributions to Pemex of 202.569 B pesos for debt repayments and granted the firm 73.280 B pesos in tax incentives. Pemex officials recently said the government will provide it with capital this year in accordance with its maturity profile.
Last month, Lopez Obrador said Mexico will reduce refining output at Pemex while it modernizes its refineries, as the government capitalizes on high oil prices. Mexico has said it will use extra revenue collected from oil prices to subsidize domestic gasoline and diesel prices, helping to contain inflation.
As MRC informed before, in March 2022, officials told Reuters that Mexico's oil exports would remain close to 1 MMbpd for much of the year, despite plans announced by Pemex to slash them to less than half that so it could refine more crude.
We remind that n late January, 2022, Pemex signed a long-term crude supply contract with Royal Dutch Shell Plc as part of its acquisition of the Deer Park refinery in Texas. Pemex and Shell in May, 2021, announced the transaction, which is worth almost USD600 MM and will make the Mexican firm the sole owner of the refinery near Houston. The facility has capacity to process 340,000 bpd. Shell will supply about 200,000 bpd of foreign and US crude to the plant for at least 15 years.
Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,487,450 tonnes in 2021, up by 13% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market totalled 1,494.280 tonnes, up by 21% year on year. Deliveries of homopolymer PP and PP block copolymers increased, whreas shipments of PP random copolymers decreased significantly.