The country’s investment plan which comprises $4.65 billion in energy projects did not include major oil exploration and production. This was despite Pemex’s declining output in crude oil.

Ixchel Castro, oil and refining markets manager for Latin America at Wood Mackenzie, told the media, “The key issue here is whether Dos Bocas is going to be operating in three years. The construction process is probably going to take longer than originally estimated, so exports will be maintained for a longer period than expected.”

It is reported that the investment plan seeks to pledge 15.4 billion pesos for upgrades to the oil company’s coking plant at the northern Cadereyta refinery.

More recently, the National Center of Energy Control has issued a directive to limit the level of renewable energy that can be generated in the country. With that, the industry is seeing suspension of licences for renewable energy plants which were set to commence operational testing in May, media reports said. This has caused chaos among investors, energy companies and consumer protection groups forcing them to push back.

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With regard to the Pemex’s tender offer, Deputy Finance Minister Gabriel Yorio told the media that, “A transaction like this is only this time. We don’t plan to do it every year, nor are we planning capitalisations like this every year. This is the last piece of support that we are planning to give to Pemex from the point of view of the 2019 fiscal year.”

Currently, Pemex’s financial debts amount to around $104 billion which makes it the most heavily indebted oil company in the world. The heavy debt is a result of declining oil output, mismanagement, and corruption.

Due to its debt, Pemex was downgraded by credit rating agency Fitch earlier this year. Another credit rating agency Moody’s has also issued a warning to the oil company about a possible downgrade. To fend off a possible second credit downgrade, Pemex must increase production and lower costs.

According to Deputy Finance Minister Gabriel Yorio, the tender offer by Pemex will help the company make some improvements. He expects Pemex will meet a target of producing an average of 1.8 million barrels of oil per day in December, up from around 1.65 million it produces currently.

The Mexican government has supported Pemex with tax breaks and cash support. The government will continue to support Pemex with a $4.4 billion budget in 2020.

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