Mexico’s Pemex Prioritizes Paying Down Overdue Debts to Big Service Providers
Pemex’s Efforts to Settle Debts
Mexican national oil company Pemex has resumed paying down its debts to suppliers, giving priority to large oilfield service companies over private producers. According to company data and industry sources, the heavily-indebted oil company has not disclosed the balance of its debts to suppliers since last October, when it reported owing $5.6 billion, excluding other related liabilities.
Challenges Faced by Pemex
At the end of last year’s third quarter, Pemex reported owing suppliers $17.4 billion, and the delayed payments to its key partners have been a recurring issue that could potentially disrupt operations if not resolved.
Government Support and Criticism
President Andres Manuel Lopez Obrador has provided over $90 billion to prop up Pemex in the last five years, but the delayed payments have raised concerns. Private oil companies that have criticized Pemex for its failure to pay up, arguing that it has put them in a critical situation.
Partial Resumption of Payments
Despite the challenges, Pemex began paying hundreds of millions of dollars to major service providers such as SLB, Weatherford, and Halliburton, privileging its own operations first. However, private oil companies that deliver their production to Pemex are experiencing an average six-month delay in payments.
Industry Responses
Major service providers such as Halliburton, Weatherford, and SLB have received significant payments from Pemex, while private oil companies have been left in a precarious financial situation. Baker Hughes expressed its satisfaction with Pemex’s efforts to pay their suppliers as the company continues to address its debts.
Pemex’s Future Plans
Pemex intends to use part of a recent tax cut to improve payments over the next quarter and partially settle its debts, aiming to address the issue of delayed payments and maintain its operations.
