00:00Mexico cutting financial support for state-owned Pemex by almost 70% next year, earmarking $4.8 billion to help
00:06cover the oil producers' debts.
00:08Even with less support for the company, the government will still run a 2027 deficit of almost 4% of
00:14GDP.
00:15Bloomberg's Alex Vasquez has been reporting on the story, and he joins us now from Mexico City.
00:20So, Alex, first question, why is the Mexican government cutting financial support for Pemex?
00:26Hi, thank you for inviting me.
00:27Well, Mexico thinks Pemex, we need to remember that Pemex still is the most indebted state oil company in the
00:35world.
00:36The company still owes around $70 billion.
00:40So, but this is good news for the government because for the first time in some years, they're cutting the
00:46support.
00:47They believe that the company will be financially self-sufficient next year.
00:53This is something new for the company, so they think they will need, that the company will need less help.
00:59We're talking about $5 billion debt for the company next year.
01:03So, that's pretty much the amount the government is injecting into the company next year.
01:08So, let's see if this actually happens, like the government has been giving the company like more than $130 billion
01:17in the last eight years to make this happen.
01:21So, obviously, it's important right now because Mexico has been dealing with trade tensions with the U.S. and a
01:29slow growth of the economy at home.
01:31And the government desperately needs to increase, you know, public spending to try to attract foreign and local investment to
01:40stimulate the economy.
01:41So, less support for Pemex, obviously, could mean more capital injection.
01:47Right, reallocating the spending here from the government.
01:51Of course, Pemex, supporting Pemex has been a big burden on the government.
01:54Just talk us through the current state of Pemex's debt right now and the company's specific short-term challenges.
02:02Yeah, I mean, next year, the company needs to pay around $5 billion.
02:08We're talking about $70 billion of debt in total.
02:12But this is hard for the company, which is struggling to increase production.
02:17They said in the budget proposal they sent to Congress this week, they set a goal of 1.8 million
02:24barrels of oil per day.
02:26They're not there.
02:27They need to increase production by about 5%.
02:30So, they're starting to do new partnerships with private companies, something that is kind of new for the government, especially
02:40with, like, small Mexican companies.
02:43But also, they have a plan to start going into deep water projects with Brazil's petrobras.
02:51Right.
02:51So, they're desperately trying to increase production.
02:54But they have, like, they haven't been doing it in a while.
02:57So, it's a challenge for them.
02:59Got it.
02:59Especially given they have that debt.
03:01Thank you very much.
03:01That's a challenge.
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