In blow to AMLO, Pemex posts massive 2019 loss

Petroleos Mexicanos posted a 345.5 billion pesos ($18.3bn) loss for 2019 on Thursday, nearly doubling the previous year’s loss and dealing a significant blow to the Mexican president’s quest to revive the heavily indebted state oil company.

The company known as Pemex said it had racked up a nine-billion-dollar loss in the fourth quarter of 2019, or about half the year’s total losses, as it struggled to reverse a 15-year streak of declining crude output. The company said its revenue during the October-December period totalled 320 billion pesos, a decline of about a fifth compared with the same three-month period in 2018. 

Mexican President Andres Manuel Lopez Obrador took office in December 2018 pledging to boost the Pemex’s oil output by about half by the end of his six-year term, as well as ease the company’s punishing debt load. Instead, oil production declined last year compared with 2018 and the government was unable to make much headway in reducing its debt despite some hefty capital injections. 

The Mexican oil giant’s total financial debt stood at $105.2bn last year, down 0.6 percent compared with $105.8bn in red ink posted at the end of 2018. Pemex’s debts to its service providers in 2019, meanwhile, rose on the year by almost a quarter to $9.8bn. 

Under Lopez Obrador, Pemex’s engineers have pledged to discover and develop 20 new oil and gas fields each year, targets viewed as extremely optimistic by industry analysts. Only three of the 20 priority projects selected last year reported crude production as of December, according to data from Mexican oil regulator CNH.

Lopez Obrador, a leftist who has pursued a state-centric energy model, has pushed back against overtures from business groups to boost production via oil auctions open to private producers that were championed by his centrist predecessor.

Pemex’s 2019 crude production averaged 1.68 million barrels per day (bpd), less than half the 3.4 million bpd the company pumped in 2004 and down by about 7 percent compared with 2018 levels.

During a conference call, Pemex executives pointed to a slight uptick in crude production during the first couple months of 2020 as proof the long-standing output slide is over.