Because nothing says “energy success” like another blank check
It seems that the liquidity of our beloved and eternally bankrupt Pemex has found a new elixir of life: the endless taxpayer portfolio. According to Fabiola Ortiz, director of S&P Global Ratings, the oil company shows “signs of relief” thanks to the recent support from the government of President Claudia Sheinbaum. Because, of course, what better cure for a company that is sinking into debt than to inject more public money into it? The logic is impeccable, like putting band-aids on a Titanic that already has several doors open.
During his participation in the Banorte podcast, “Norte Economico”, Ortiz, with the serenity of someone who announces that it will rain in the rainy season, highlighted that the parastatal received pre-capitalized notes for the modest amount of 12 billion dollars. This fabulous sum, which was surely found behind the sofa of the National Palace, will cover about half of its short-term maturities, estimated at 28 billion dollars. That is, they cover half the hole. The rest? That’s a problem for next year’s budget.
The art of kicking the can (of debt) forward
As if it were a magician pulling rabbits out of an empty hat, the company also announced the prepayment of international bonds for another 10 billion dollars, focused on “relieving” debt maturities between 2026 and 2029. Because Pemex’s financial strategy seems to be based on the famous principle of “pay a debt with another debt, but with a different date.” A masterstroke that any Sunday economist would applaud.
The S&P expert, in a burst of comic lucidity, admitted that these supports “definitely release short-term liquidity pressures.” Wow, what a novelty! Injecting 12 billion usually relieves the pressures of almost anything, except perhaps the conscience of whoever has to explain where that money came from. But immediately afterwards, like the voice of reason at a party of waste, he warned that structural challenges persist. A very elegant way of saying: “this is a patch on a blown tire, but the engine is still blown.”
He did quick math: Pemex reported close to $28 billion of short-term debt maturities. Let’s subtract the 12 billion from the pre-capitalized notes… Surprise! There are 16 billion left to cover. Top-level mathematics that, apparently, requires an expert of international stature to be understood.
To cover this small remaining “deficit” (so to speak), the federal government, in an act of blind faith, contemplates an item of around 260 billion pesos in the 2026 budget. Because what is the public budget if not a piñata that Pemex can hit whenever it feels like it?
Alejandro Padilla, the chief economist of Banorte, pointed out that this support implies an increase in the oil company’s total budget of close to 8% in real terms. This, according to their calculations, represents potential access close to 50 billion dollars. Which strengthens the “perception” of investors. Ah, perception… that magical place where real problems fade away as long as truckloads of fresh money arrive.
The strategic plan: deja vu with the smell of crude oil
Given the always ambitious objectives of Pemex‘s strategic plan—which seek to optimize mature fields, increase reserves and raise refining capacity above 50%—, Ortiz stressed the “relevance” of opening to private initiative. That is to say, after decades of insisting on the nationalist model, it now turns out that salvation lies in someone else providing the capital. What a revolutionary idea!
“It is interesting that the plan also includes the participation of private companies,” he explained, with the surprise of someone who discovers warm water. Because, of course, to achieve adequate crude oil production to offset the company’s monstrous amount of debt, there is nothing better than seeking external help. Energy self-sufficiency, it seems, is achieved depending on outside investments. The irony is so dense that it could be refined in one of its plants.
In summary, although the supports relieve immediate tensions (like a painkiller for a patient in intensive care), the supposed sustainability of Pemex will depend on the effective execution of that strategic plan that we have heard in different variations for the last 20 years. Operational strengthening and continued financial support—read: more public transfers—remain key factors in maintaining investor confidence and Mexico’s economic stability. Or, in other words, to continue pretending that everything is under control.
So let’s celebrate, dear readers. Our favorite oil company has been given another artificial respite. Because in the upside-down world of public finance, the definition of success is not going bankrupt today, no matter the cost tomorrow.
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