Pemex production affected by supplier payment delays, sources say

Pemex production affected by supplier payment delays, sources say
Pemex production affected by supplier payment delays, sources say

Crude oil production at Mexican state-owned Pemex has been affected because it continues to accumulate debts with its service providers, two sources said, a situation that has forced it to publicly reaffirm twice this week that the debts would be paid.

Although Pemex has not released its latest figures for crude oil and condensate production, data from the hydrocarbons regulator showed earlier this week that production of both types of oil and condensates had fell 6% year-on-year in April, to 1.75 million barrels per day (bpd).

Crude oil production stood at 1.47 million bpd, the company’s lowest output in 45 years.

One of the sources said Pemex’s failure to pay its service providers was one of the main reasons affecting production over the past two months, followed by an accident on an offshore platform in April. .

Pemex never gave details of the accident, although Reuters reported an initial decline of 20,000 bpd.

In its latest debt report, Pemex reported pending payments worth about $8.82 billion as of the end of April. This figure does not include taxes, amounts in dispute or those under negotiation.

In its first quarter results, Pemex reported $21.9 billion in pending payments. It then indicated that it had paid $6 billion in the meantime.

None of these figures include the $101.5 billion in financial debt, which is largely held in bonds.

One of the sources said that due to lack of payment for their services, some companies have stopped working for Pemex, partially or completely. The Source did not reveal any names.

It is also unclear which companies Pemex owes the most.

Pemex did not respond to a request for comment.

In public filings, she named Dowell Schlumberger, Halliburton, Baker Hughes, Weatherford and Sinopec among the hundreds of companies she owes money.

The second Source confirmed this information, but added that some payments would be scheduled and once companies received them, they would return to work and production would restart in May.

At the start of the year, several industry groups representing service providers and private producers sounded the alarm: production, investments and, in some cases, the very survival of companies were under threat.

Pemex resumed some payments in February, favoring large companies over others.

Late Wednesday, Pemex issued a statement pledging to pay its debts and noting that it had paid between 39 billion pesos ($2.34 billion) and 70 billion pesos per month since beginning of the year.

On Thursday, Pemex doubled down on its commitment by issuing another statement pledging to pay 70 billion pesos in May.

Mexico holds a general election on June 2, and President Andres Manuel Lopez Obrador has been keen to show that his policies have helped the struggling state-owned company during his almost six years in power, and that his successor would continue to do so .

Claudia Sheinbaum, the candidate of the National Regeneration Movement of Mr. Lopez Obrador, in power, is well ahead in the polls.

Under Lopez Obrador, Pemex benefited from a financial lifeline in the form of cash injections and tax cuts amounting to around $90 billion. ($1 = 16.6891 Mexican pesos) (Reporting by Ana Isabel Martinez in Mexico City; Additional reporting by Adriana Barrera in Mexico City; Writing by Stefanie Eschenbacher and Matthew Lewis)



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