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Pemex production hurt by late payments to suppliers, sources say
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Pemex production hurt by late payments to suppliers, sources say
May 24, 2024 2:12 PM

MEXICO CITY, May 24 (Reuters) - Mexican state energy

company Pemex had its crude oil production hit because it keeps

accumulating debt with its service providers, two sources said,

a situation that has forced it to publicly reiterate twice this

week that the debts would be paid.

While Pemex has not published its latest figures for crude

oil and condensate output, data from the hydrocarbon regulator

showed earlier this week that production for both fell 6%

year-on-year in April to 1.75 million barrels per day (bpd).

Crude oil production alone was 1.47 million bpd, the lowest

output for the company in 45 years.

One of the sources said that Pemex not paying its service

providers was one of the main reasons that affected output over

the past couple of months, followed by an accident on an

offshore platform in April.

Pemex never gave details of the accident although Reuters

reported an initial decline of 20,000 bpd.

In its latest debt report, Pemex listed pending payments

worth about $8.82 billion as of the end of April. The number

does not include taxes, amounts in still litigation or those in

settlement talks.

In its first-quarter results, Pemex had listed $21.9 billion

in pending payments. It later reported that it had paid $6

billion in the meantime.

None of these numbers include the $101.5 billion financial

debt, which is largely held in the form of bonds.

One of the sources said that as a result of not getting paid

for their services, some companies stopped working for Pemex

either partially or completely. The source did not disclose

names.

It was also not clear which companies Pemex owed the most.

Pemex did not respond to a request for comment.

In public documents it has listed Dowell Schlumberger

, Halliburton ( HAL ), Baker Hughes ( BKR ), Weatherford

and Sinopec as some of the hundreds of companies it

owes.

While the second source confirmed this, they added that some

payments would be scheduled and once companies receive them they

would return to work and production would pick up in May.

Earlier this year, several industry groups representing

service providers as well as private producers sounded alarm

that production, investment and in some cases even the survival

of companies were at risk.

Pemex had resumed some payments in February, favoring larger

companies at the expense of others.

Late on Wednesday, Pemex issued a statement pledging to pay

its debts and highlighting that it had been paying between 39

billion pesos ($2.34 billion) and 70 billion pesos per month

since the start of the year.

On Thursday, Pemex doubled down with another statement in

which it pledged to pay 70 billion pesos in May.

Mexico holds a general election on June 2, and President

Andres Manuel Lopez Obrador has been keen to show that his

policies have helped the ailing state company over almost six

years in office, and that his successor would continue to do so.

Claudia Sheinbaum, the candidate from Lopez Obrador's ruling

National Regeneration Movement, has been leading most polls by a

substantial margin.

Under Lopez Obrador, Pemex received financial lifelines in

the form of cash injections and tax cuts of about $90 billion.

($1 = 16.6891 Mexican pesos)

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