Through Amy Stillman and Maya Averbuch to 12/13/2021
MEXICO CITY (Bloomberg) –Mexico could cut Pemex taxes again as the world’s most indebted oil company scrambles to reverse the long-term decline in oil production.
“With Pemex, for example, we are constantly or periodically reducing taxes so that they have more funds,” President Andres Manuel Lopez Obrador said at his daily press conference on Monday. “And we can lower them further.”
In September, the government reduced Pemex’s profit-sharing rights to 40% for 2022, from 54% in 2021. Last week, Pemex announced that it would receive a capital injection of $ 3.5 billion from the government in a transaction to repay its bonds and also initiate a series of bond buybacks and new issues to reduce the cost of servicing its loans.
The besieged state oil company has $ 113 billion in debt, the largest number of oil producers, and has seen production decline for more than a decade. Pemex replaced its CFO this month over fears it might not be able to gain investor confidence. It could also end up spending nearly twice as much as initially planned to take over the Deer Park refinery from Royal Dutch Shell Plc in Texas.
Since coming to power at the end of 2018, Lopez Obrador has made it his mission to reverse his predecessor’s energy reforms and restore Pemex’s virtual monopoly in the oil sector. AMLO’s energy policies have been criticized by investors for allocating more resources to the company’s unprofitable refining activities and reducing crude exports in order to send oil to its refineries instead. International credit rating companies such as Fitch Ratings and Moody’s Corp. have downgraded Pemex’s bonds to junk in recent years, in part because they claim it doesn’t have a clear strategy to reverse production declines.
“We no longer follow neoliberal policies, which treated Pemex as if it were any other business,” Lopez Obrador said on Monday. âNow Pemex is a government protected, backed and backed company. “