Mexican state-oil firm Pemex is exploring 15 so-called integrated exploration and extraction contracts (CSIEE), a type of public-private partnership, Finance Minister Arturo Herrera said on Sept. 10.
Herrera said in an interview with broadcaster Televisa that a bidding process for the contracts would be opened between November and the first quarter of 2020.
“Pemex is exploring mechanisms ... with private firms through what is called CSIEEs. It has identified 15 of these contracts that are like public-private partnerships and the company is looking at opening the bidding process between November and the first quarter next year,” Herrera said.
The Mexican government’s budget for next year, which Herrera presented to lawmakers on Sept. 8, estimated Pemex’s year-end 2020 oil output at 1.95 million barrels per day (MMbbl/d), up from an estimate of 1.73 MMbbl/d this year.
Forecasts for increased oil production from the highly indebted Pemex were met with skepticism, considering that the firm's crude production has fallen for 14 years running.
“What makes us feel optimistic regarding production?” Herrera asked. “Pemex’s change in strategy wherein it is investing more in shallow waters and on land where it is easier to extract ... and we are giving it 86 billion pesos, 46 billion pesos in direct investment,” he said.
However, credit rating agency Moody’s analyst Ariane Ortiz-Bollin said in a brief statement on Sept. 9 that the budget proposal underestimates the amount of funding that Pemex may require going forward.
The budget calls for a 523.4 billion-peso (US$26.8 billion) budget for Pemex, up about 9% compared with this year. Herrera has stressed the additional 86 billion pesos in support for the firm, including tax breaks and a capital injection of 46 billion pesos.
Pemex, the world’s most indebted oil company, is at risk of a second downgrade of its bonds to so-called junk status after Fitch did so in June, which would trigger forced selling of bonds worth billions of dollars.
Herrera said the government will “defend the credit rating” of Pemex, assuring the firm has money to invest and managing its debt profile so it is “more adequate.”
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