Mexico's government will absorb regular debt payments this year for Petroleos Mexicanos (Pemex), as President Andres Manuel Lopez Obrador intensifies his efforts to prop up the heavily-indebted state-run oil company.
Those so-called debt amortization payments will total over $6 billion in 2021, Chief Executive Officer Octavio Romero said Thursday at an event in southern Mexico in the president's home state Tabasco, one of the country's biggest oil producers.
"The president of the republic has offered, since the campaign, to rescue Pemex, and he is demonstrating that with actions," Romero said, standing alongside Lopez Obrador.
The two spoke at an event marking the anniversary of the 1938 expropriation of foreign oil assets.
Pemex said its financial debt stood at $113.2 billion at the end of 2020, despite several capital injections from the government to boost its weak finances.
Mexico's fiscal deficit will widen to 4.1% of gross domestic product this year, with ongoing support for Pemex driving up debt, ratings agency Moody's forecast in late February.
Moody's estimated that Pemex will need $14.7 billion in government support this year alone.
Romero said Pemex had made a new 500-600 million barrel discovery and that the company hopes to close 2021 with production close to 2 million barrels per day (bpd).
Pemex has seen oil output slide for 16 straight years as its biggest, largely offshore deposits have been extensively tapped.
Lopez Obrador said Pemex's tax bill will be further reduced, without providing details. He also announced a sharp reduction in the company's oil output goal going forward to no higher than 2 million bpd, couching it as an environmental imperative.
"With this moderate production we'll fulfill the commitment to replace, and that is the norm, 100% of the proven reserves. That way we'll avoid the excessive use of fossil fuels, we'll continue to act responsibly and we won't affect what future generations will inherit," Lopez Obrador said.
In late 2018, Pemex was aiming to boost crude production to over 2.6 million bpd by the time his six-year term ends in 2024.
The company currently pumps about 1.7 million bpd and sector analysts have generally been downbeat on the likelihood of any significant rapid uptick.
(Reporting by Ana Isabel Martinez in Acachapan y Colmena and Adriana Barrera in Mexico City; Writing by Anthony Esposito and Laura Gottesdiener; Editing by David Alire Garcia and Stephen Coates)