Vastavam web: Mexican President Andres Manuel Lopez Obrador brushed off a credit downgrade to state oil company Pemex, arguing on Wednesday that corruption is being eliminated from its ranks and the firm is stronger than it has been in 30 years. Rating agency Fitch on Tuesday downgraded Petroleos Mexicanos, the official name of the state oil and gas producer, which holds some $106 billion in financial debt.
At a regular news conference, Lopez Obrador lashed out at the ratings agency, saying Fitch was hypocritical because in the past it gave the firm positive reviews despite its problems. The Fitch downgrade sent the peso currency tumbling on Wednesday morning before it pared losses. Rival ratings agency Moody’s will maintain Pemex’s credit rating in the first half of the year, its Senior Vice President Nymia Almeida said on Wednesday, while monitoring how the company performs under Lopez Obrador.
Pemex’s total debt load is the highest of any national oil company in Latin America, and a former executive said the downgrade would put pressure on the firm for now. “Pemex will face higher financial costs and its projects will get a little more expensive,” Carlos Morales, who served as Pemex’s exploration and production chief for a decade through 2014, told an oil conference in Mexico City.
His plan to raise output, currently at about 1.8 million barrels per day (bpd), is mostly built on plans to pump more government money into exploration and production. Lopez Obrador also wants to build what would be Mexico’s biggest oil refinery on the southern Gulf coast. He has not detailed how his government will finance the project that he has said will cost around $8 billion, and has been a staunch critic of a landmark 2013-14 energy reform that opened up the Mexican oil industry to private investment.
Alberto de la Fuente, Mexico country manager for Royal Dutch Shell Plc , told the conference after the Fitch downgrade that Lopez Obrador should reconsider the role of private companies. “If (Mexico) were carrying out more oil auction rounds, more (Pemex) farmouts, that could give positive signals to financial sector investors,” he said. “Pemex doesn’t have the means to do everything it wants to do and (private) capital could help.”