The Mexican government is working on a plan to save the state-run oil and gas company Pemex, which is struggling with more than US$100bn in debt and years of declining production. Besides, the company was also recently downgraded by the ratings firm Fitch, which means that it will need additional funds ranging between US$9bn/year and US$14bn/year to make it through.
The proposed plan is likely to include a cash injection process to reduce the company's fiscal burden. The total amount of rescue funds is still under discussion but is currently estimated at US$1.5bn. Besides, the government has also announced a series of tax breaks for Pemex and will announce further support schemes shortly.
Although Pemex controls the majority of the domestic assets, it lacks funds to accelerate the development of its reserves and needs to raise capital. Due to the natural depletion of oil fields and a lack of investment, the company's production has plummeted for years, from a peak of 3.6 mb/d in 2004 to 1.8 md/d in the first half of 2018. However, the government plans to reverse the trend and add 600,000 bbl/d to reach 2.4 mb/d by 2024.