- Pemex has stable finances, with room to improve, but stable, and it will reach a primary surplus in 2017
- The MXN 100 billion adjustment budget cut announced in February will be achieved by year end. The company will even exceed the established savings goal
- The actions contained in the Business Plan are based on conservative scenarios and realistic parameters
- With the announced measures, Pemex will reach financial balance in 2019 and in 2021 it will overcome the losses in the National Refining System
- The Business Plan is already in execution and has made important breakthroughs:
- Pemex risk has decreased by 50%, 148 basis points
- Launch of first farm outs: Trion block in deep waters, Ayin-Batsil in shallow waters and Cárdenas-Mora-Ogarrio onshore fields
- Gasoductos de Chihuahua divestiture
Today, Petróleos Mexicanos (Pemex), one of the largest 100 companies in the world, presented its 2017-2021 Business Plan. This Plan sets forth the actions that will enable the State-owned productive company to reach its primary surplus in 2017 and to achieve financial balance in 2019/2020.
Pemex’s CEO, José Antonio González Anaya, pointed out that the Business Plan is already being implemented, and important breakthroughs have been made.
The MXN 100 billion budget cut announced in February 2016 will be completed in 2016, and the established savings target will even be exceeded, reaching MXN 35 billion due to the austerity measures, MXN 6 billion in excess of the programmed amount. Furthermore, total 2015 overdue accounts payable to suppliers have been paid or are scheduled for payment. Finally, the company went through a corporate restructuring process, and reduced by 40% senior management positions.
This ambitious adjustment program is set in accordance with measures implemented by other large international oil companies, having fulfilled it supports the objectives and goals set for the next five years.
The results obtained from said measures have gradually yielded an increased confidence from international markets into Pemex’s future. So far this year, Pemex’s risk has decreased by 50%, the average term of the debt has increased and the company has been able to successfully access several financial markets that hadn’t been approached in many years, such as the Japanese financial market.
Mr. González Anaya stated that Pemex has the challenge to adjust its cost structure to a low oil price scenario and the historic opportunity of taking advantage of the tools provided by the Energy Reform that was promoted by President Enrique Peña Nieto in 2013.
Due to changes in its legal framework, Pemex can carry out operations in a similar way to the rest of the international oil companies, which will enable it to reverse the last years’ downward trend in its results and share technical, technological and financial risks along the entire value chain.
The Business Plan encourages the creation of joint ventures along Pemex’s entire value chain as a mechanism to increase investment and efficiency. Mr. González Anaya emphasized that these tools are now a reality and pointed out as examples the bidding processes for the Trión block in deep waters, Ayin and Batsil fields in shallow waters and Cárdenas-Mora and Ogarrio onshore fields.
Mr. González Anaya highlighted the fact that proposed actions will allow the replacement of Cantarell’s natural declining production to stabilize it and increase it in the medium-term, in addition to streamlining its refineries’ operation therefore eliminating losses in the National Refining System by 2021.
The Plan, available at Pemex’s website, establishes the actions, challenges and opportunities that the company will face in the following years, from a conservative-scenario perspective and taking into account realistic parameters for each and every one of its state-owned productive subsidiaries, which are among the world’s largest in their respective fields.
The Business Plan implementation will allow Pemex to strengthen its current position and continue as Mexico’s emblematic company.