Fuel imports put pressure on PEMEX's finances

PEMEX makes MXN$15 billion adjustment in its investment budget
Fuel imports put pressure on PEMEX's finances
The Administrative Board evaluated the annual programs of the company and its subsidiaries in 2017 - Photo: File photo/EL UNIVERSAL
03/05/2018
19:13
Noé Cruz Serrano
Mexico City
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The large volumes and import costs of fuel, both gasoline and diesel, are affecting the finances of the Mexican National Oil Company (PEMEX).

The Administrative Board evaluated the annual programs of the company and its subsidiaries in 2017, concluding that the import volumes of fuel had affected the company’s income in the past year “as a consequence of a deficient production of petroleum products at PEMEX Transformación Industrial, (Industrial Transformation), a branch of the Mexican Oil Company.”

Given these circumstances, it was made necessary to authorize “a budget adjustment to assess a transfer of MXN$15 million in physical investment for operation expenses, with the purpose of maintaining its operative continuity without damaging the goals that were previously outlined.”

In other words, the present balance was added in the last regular meeting on April 12th, where it was said that “in order for PEMEX to achieve its financial goal, the programmable expense has to be cut back to compensate this effect.”

From 2010 to March 2018, PEMEX has spent an estimate of USD$107,975,000,000 on the purchase of gasoline abroad.

The highest authority committee of PEMEX sustained that, even though 2017 showed an improvement on international market conditions, particularly with regard to the recovery of prices for the international benchmark crude oil, a decrease of 2.7% was registered in the Federal Expense Budget, which mounts up to MXN$10.5 million, and the company was, therefore, unable to reach the scheduled level of income. With this in mind, it was “necessary to implement adjustments in the projected expenditure, particularly regarding the investment.”

During the past year, the oil company imported an average of 570 thousand barrels of gasoline per day, for which it is estimated to pay out USD$15,102 million.

The assessment goes even further, given that the Administrative Board concluded that “the implementation of opportunities that were included in the Business Plan hasn’t been carried out at the rate that was initially planned, and some of them have had to be rescheduled, reconsidered and even discarded.”

Among the opportunities within the Business Plan, some scientific aspects stand out, such as certain investments related to the reconfiguration of refineries and the recovery of reliability in refining operations.

PEMEX should put their focus on arranging a plan of action that will allow for the economic loss to be reverted in their business strategies; recover a level of activity that might eventually compensate the decline in oil fields; improve the operational performance of the refineries, and establish mechanisms that ensure the supply of raw materials for their production methods, according to the analysis.

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