The Mexican government has updated its plan to save the ailing state-held oil and gas company Pemex, in an attempt to improve its balance sheet and prevent a further downgrade of its credit rating. The government has proposed a cash injection of US$3.6bn by 2024 (at least US$1.25bn by the end of 2019, plus US$1.8bn to monetise labor liabilities and US$600m for "additional fiscal aid 2019-2024") and a reduction in taxes paid by the company. Part of the funding - around US$1.6bn - would come from the government's fight against fuel theft. Besides, the government has confirmed that the company would make all its debt payments.
Pemex holds approximately US$106bn in financial debt, the largest of any state-run oil company in Latin America. The company was recently downgraded by the ratings firms Moody's and Fitch, which means that it will need additional funds ranging between US$9bn/year and US$14bn/year to make it through.
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.