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Released August 21, 2023 | SUGAR LAND
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Written by Amir Richani for Industrial Info Resources (Sugar Land, Texas)--Last week, Fitch Ratings released a report stressing that a substantial increase in financial support from the Mexican government to state-owned oil firm Petroleos Mexicanos (Pemex) (Mexico City) could lead to more deficit and a higher government debt-to-GDP ratio, which could threaten Mexico's sovereign credit rating.
According to Fitch, the financial support for the company does not "outright guarantee the company's debt or provide a capital injection that materially improves its financial position." Pemex's debt by the end of the second quarter stood at US$110 billion.
In line with the agency's base scenario, the government will continue to support Pemex with some US$15 billion per year to cover international bond debt amortizations.
It will depend on the Mexican government's financial and fiscal maneuvering, amid constant support for Pemex, to avoid a sovereign credit downgrade pushed by a higher debt-to-GDP ratio.
Mexico currently has a credit rating of BBB-, considered a good credit rating. Nevertheless, a new credit downgrade could lead to a speculative status, impacting the financial performance of the Latin American country.
In July, Pemex saw its credit drop to B+, a highly speculative status that represents the possibility of material default risk. The reason for the downgrade is "Pemex's continued weak operating performance, " including several operational incidents since February 23.
Among the accidents was a fire in the Nohoch-A platform in the Cantarell complex that caused several casualties and injuries and impacted the company's production.
The Mexican government has placed Pemex at the heart of its domestic agenda, supporting the company to grow its business. It is unlikely that the current administration of Andres Manuel Lopez Obrador will change its Pemex-centered policy, despite the analysis from agencies such as Fitch.
Among the flagship projects of Pemex and the government is the construction of the 340,000-barrel-per-day (BBL/d) Dos Bocas Olmeca refinery. Lopez Obrador and his government had expected to finish the refinery earlier, but it has yet to start operations.
According to Industrial Info, Pemex is still putting some processes into operation, such as the turbo generators, and is conducting testing on major dynamic equipment, including trials with nitrogen.
Based on Industrial Info's intelligence, the next steps include refractory drying works on the crude unit, heating up and charging of the crude unit. The first test run is scheduled to occur during the week of September 4 with expectations for the first commercial runs to be reached by late 2023 or even early 2024. Subscribers to Industrial Info's Global Market Intelligence (GMI) Petroleum Refining project and plant databases can click here for a related project report and here for a refinery profile.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 Trillion (USD).
According to Fitch, the financial support for the company does not "outright guarantee the company's debt or provide a capital injection that materially improves its financial position." Pemex's debt by the end of the second quarter stood at US$110 billion.
In line with the agency's base scenario, the government will continue to support Pemex with some US$15 billion per year to cover international bond debt amortizations.
It will depend on the Mexican government's financial and fiscal maneuvering, amid constant support for Pemex, to avoid a sovereign credit downgrade pushed by a higher debt-to-GDP ratio.
Mexico currently has a credit rating of BBB-, considered a good credit rating. Nevertheless, a new credit downgrade could lead to a speculative status, impacting the financial performance of the Latin American country.
In July, Pemex saw its credit drop to B+, a highly speculative status that represents the possibility of material default risk. The reason for the downgrade is "Pemex's continued weak operating performance, " including several operational incidents since February 23.
Among the accidents was a fire in the Nohoch-A platform in the Cantarell complex that caused several casualties and injuries and impacted the company's production.
The Mexican government has placed Pemex at the heart of its domestic agenda, supporting the company to grow its business. It is unlikely that the current administration of Andres Manuel Lopez Obrador will change its Pemex-centered policy, despite the analysis from agencies such as Fitch.
Among the flagship projects of Pemex and the government is the construction of the 340,000-barrel-per-day (BBL/d) Dos Bocas Olmeca refinery. Lopez Obrador and his government had expected to finish the refinery earlier, but it has yet to start operations.
According to Industrial Info, Pemex is still putting some processes into operation, such as the turbo generators, and is conducting testing on major dynamic equipment, including trials with nitrogen.
Based on Industrial Info's intelligence, the next steps include refractory drying works on the crude unit, heating up and charging of the crude unit. The first test run is scheduled to occur during the week of September 4 with expectations for the first commercial runs to be reached by late 2023 or even early 2024. Subscribers to Industrial Info's Global Market Intelligence (GMI) Petroleum Refining project and plant databases can click here for a related project report and here for a refinery profile.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 Trillion (USD).
