If an oil company can’t make money in a period when oil prices skyrocket, it’s probably safe to say that there’s no hope for them. The darling of Mexican socialism seems to have fallen into that rut. How long until the defaults start and the country becomes another Venezuela?
The Mexican state oil company said Monday it had a fourth-quarter net loss of 172.4 billion pesos ($9.4 billion) compared with a net loss of 52 billion pesos in the third quarter, once again foregoing profits at a time when many major oil companies are raking in record billions.
Pemex is struggling to pay down debts that have risen to the highest of any oil major in the world. It must find the means to pay for about $8 billion in maturing debt this year.
Hard to repay debt or renew when you are losing money. Turn on the printing press! That is what the other two amigos do.
I live in Mexico. The peso is up 15% against the Canadian dollar in the past year. It’s becoming a problem for me drawing my pension from the Great Northern Socialist Paradise.
Come home Stevo and bask in the communist paradise where prices are even worse than in Mexico.
Maybe they have a big expense of paying the cartels protection money. Or there is major corruption going on. Or both.
Not quite, CGNB. As a state-owned petroleum company, Pemex pays huge dividends to the Mexican government. This has kept Pemex perpetually starved of investment capital for decades. Its one of the key reasons why its production declines every year. It has ageing oil reserves and little to no investment for new discovery because of the enormous extraction of cash out of it by the Mexican government.
In short, Pemex is providing the funding for a huge proportion of the Mexican government’s operations. That’s what’s keeping it poor. It was set up and designed to run this way after it was formed in 1938 by government seizure and expropriation of a host of smaller private oil companies.
@ cgh:
So maybe we can blame socialist corruption?
cgh
Good to see you still replying here. If this venue had an upvote feature, you would get one from me.
Can you say “Kinder Morgan Pipeline”?
What was the last “Cost estimate” from the feckless bureaucrats now “Building” that line?
Mexico is just reaching the end of that same road we are hell bent on travelling.
Was down there a month ago. Regular sells for 23/24 pesos a litre. Equivalent 1.80 Can dollars, very similar to here.
Must be Mexican accounting practices……
I suspect they have to pay a lot of protection money to the drug cartels and/or the government.
There’s nothing a government can’t run at a loss.
I bet their employees to oil produced is triple the industry standard.
About 20 years ago I was at a UN meeting in Rome. The meeting I was in was particularly boring and I popped out for smoke. Struck up a conversation with a Mexican guy who was doing the same thing. In that conversation he told me that under the terms of NAFTA Mexico was obligated to sell most of their oil to the US at a fixed price way below market price.
I never checked if it was true or not, but given the predatory nature of US trade policy in general and the particularly obnoxious behaviour of the US trade representative at the meeting, I have little reason to doubt it is mostly true.
Plus, how many executives are finding ways to take the money and run?
I think it’s against the law in Mexico for private oil companies to invest in the oil industry. PEMEX may contract out some work to Halliburton or Baker Hughs for example, but they’re contractors and workers then, not investors.
Mexico has been sucking far more out of PEMEX than they should be.
In Venezuela, the gov’t has used PDVSA as their private piggy bank to fund everything in the country, there’s VERY little produced in the country for export, unlike 24 years ago.
When Halliburton / Baker Hughs left Venezuela, PDVSA owed them (each?) more than $1 Billion. I don’t follow it anymore, I doubt they’re interested in returning to Venezuela without being paid for past debts as … “fool me once shame on you, fool me twice shame on me” may apply.
Not really sure how you screw up selling black gold.. A good starting point is state owned.. Everybody and their brother wants a piece..
Pemex has been a joke since day 1.