KEY POINTS
- Pemex reported a $9.1 billion loss, citing operational and financial struggles.
- Crude production fell 10 percent, while debt remained near $100 billion.
- Government support continues, but analysts doubt long-term sustainability.
Mexican state-owned oil company Pemex posted a staggering 190.5 billion-peso ($9.1 billion) net loss in the fourth quarter, a sharp downturn from the previous year’s profit.
The company attributed its losses to rising operational costs, devaluation of fixed assets, and currency exchange losses.
Jorge Alberto Aguilar, Pemex’s corporate planning chief, admitted that the company is facing a unique and challenging situation, citing operational struggles, reduced working capital, and declining oil output.
“This is different from past circumstances,” Aguilar said during a call with analysts. He emphasized the urgent need for a recovery strategy as budget constraints continue to limit Pemex’s ability to reinvest in its operations.
Despite the financial strain, the Mexican government remains a key supporter of Pemex, injecting billions to help manage its debt.
However, crude production has reached all-time historical lows, while offshore fields show signs of running out, which makes it difficult for the company to improve its situation.
Declining crude output and growing debt
The fourth quarter crude and condensate output from Pemex dropped to 1.65 million barrels per day, this value was 10 percent lower than before.
The production decreases in important oil facilities such as Maloob, Zaap, and Quesqui pushed Pemex toward financial ruin.
The financial data presented at 2024 year-end showed Pemex had 750.6 billion pesos worth of negative working capital, indicating severe resource limitations.
Meanwhile, its total financial debt remains near $100 billion, making it one of the most indebted oil companies in the world.
The Mexican government gave Pemex 156.5 billion pesos in financial aid, which Pemex used 96 percent to pay debts instead of operational investments.
According to Reuters, the company also owed 506.2 billion pesos ($24.2 billion) to service providers as of December.
Government support and refinery expansion efforts
Despite Pemex’s financial woes, there were some bright spots in its latest report. Pemex’s revenue surged by 3 percent to reach 436.6 billion pesos, which matched a tax burden decline to 45.7 billion pesos compared to the previous year’s 53.9 billion pesos.
The Mexican government places primary importance on refining operations at Pemex because it seeks to decrease national dependence on imported fuels.
The company processed 786,000 barrels per day in the fourth quarter as part of efforts to expand domestic fuel production.
However, analysts doubt that Pemex can resolve its financial challenges unless the company implements fundamental organizational reforms.
The company’s long-term viability will depend on whether it can successfully implement its recovery strategy and reverse its declining oil output.
