Finance Ministry to Faucet Banks to Assist Pemex Pay Debt with Suppliers

Mexico’s finance ministry is getting ready to enlist a consortium of banks to offer financing that Petroleos Mexicanos would use to repay debt with service suppliers, in line with a recording of remarks made by its CEO. 

The state-owned oil firm is coordinating with the finance ministry, which might doubtlessly tackle debt on its behalf to pay the service contractors, Chief Govt Officer Victor Rodriguez mentioned at a non-public occasion on Friday hosted by Mexico’s School of Petroleum Engineers.

“We’re being supported by the finance ministry,” Rodriguez mentioned in a video recording obtained by Bloomberg. “Now we have a debt ceiling that we can not use as a result of it might be very costly. So who’s going to do it for us? The finance ministry.”

- Advertisement -

The content material of the recording was confirmed by two sources conversant in the matter who will not be approved to remark because the assembly was personal, whereas one other supply confirmed the financing plans.

Pemex didn’t instantly reply to a request to substantiate the feedback. A finance ministry spokesman additionally didn’t instantly reply to a request for remark.

Pemex and the ministry will work with a consortium of banks to offer the funds, Rodriguez mentioned on the occasion. That can be along with the budgetary assist already allotted to the state oil driller and refiner for 2025, he added. Pemex is conscious that many suppliers will come in search of compensation, and so the corporate can be accountable about who it should pay first, Rodriguez mentioned.

Pemex owes its suppliers greater than $20 billion in again funds for oilfield work and different companies, in line with John Padilla, managing director of IPD Latin America, an vitality consultancy.

Earlier this month, Mexico mentioned it might switch round $6.7 billion to Pemex by way of budgetary assist to cowl debt funds in 2025. The money injection comes as President Claudia Sheinbaum appears to proceed state assist for the oil driller and refiner that’s saddled by a virtually $100 billion debt burden. The corporate has round $9 billion in monetary debt coming due subsequent yr and roughly $13 billion in 2026, when maturities will peak. 

Previously, banks together with Citigroup Inc. and Deutsche Financial institution AG have offered financing to Pemex to assist it pay excellent payments to oilfield service suppliers, together with SLB. In return, SLB has successfully assured in opposition to a Pemex default on the mortgage by issuing greater than $1 billion of credit-default swaps to the 2 banks.