2016 Oil and Gas Summit: Pemex performance and Options for the Future
Ernesto Marcos Giacoman, President of Amespac, presented an overview of PEMEX’s oil and gas supply chain. The state owned company is going though an interesting phase as it has lost hold off its monopoly with the Energy Reform. Nonetheless, it continues to be one of the most important players in the industry.
He adds that rig count is an effective way to evaluate an operator, as it shows how oil activities are undergoing. The last notification of 2016 showed 14 rigs. PEMEX’s capacity utilisation rate is currently at 60%. Unfortunately, the type of oil that is operating has low production levels.
The President of Amespac explained that the Mexican government is highly dependent of oil revenues. Over the last decade, PEMEX’s contribution to public revenues was more than 30%, meaning a third of the budget was obtained through oil. Mexico's federal budget is learning to wean off PEMEX, and working towards diversifying its income.
The company has never worried about having positive equity accounts, but the accumulated losses has brought PEMEX to a negative of US$80 billion.
Debt with suppliers and contractors has only been increasing. The company has had to experience a deep budget transition. Before the year started, it had already deducted 28% of its budget and it experienced a greater cut after the recent transition. In total, the reduction between the initial budget to now has been massive. Its debt increased MX$ 3 billion between 2012 to 2016.
As a result, the company has few new contracts and needs help from the government to keep up with debt from contractors that completed projects in 2015. However, the government is not at an ideal position to help PEMEX in the short term.
Hope can be found within oil reserves that can pay its debt in the medium term. The success of the reform truly depends on PEMEX’s leadership position, and fortunately, the reform has opened a limitless amount of opportunities to face its challenges. The options are limitless. The first farmout with Trion took a long time to program, but it is finally working. He is sure that these types of mechanisms that the Reform offers can boost the state owned company's supply chain value.