Business

Mexican state oil firm Pemex reports US$23 bil loss last year

Rating agencies Fitch and Moody’s downgrade energy corporation’s credit rating to junk status

Updated 5 years ago · Published on 27 Feb 2021 9:20AM

Mexican state oil firm Pemex reports US$23 bil loss last year — The combination of ‘low prices for crude oil and petroleum products’ and ‘a steep fall in fuel consumption that eroded the cash flows of all oil companies’ led to the worst crisis in Mexican state energy giant Pemex’s history, says the oil conglomerate. – Wikipedia pic, February 27, 2021

MEXICO CITY – Mexican state energy giant Pemex yesterday reported a loss of around US$23 billion (RM93.16 billion) last year as it grappled with a slump in oil demand caused by the coronavirus pandemic.

The company said it had faced “the worst crisis in its history” last year due to the health crisis sweeping the planet.

It blamed “the unprecedented combination of low prices for crude oil and petroleum products” and “a steep fall in fuel consumption that eroded the cash flows of all oil companies”.

Pemex announced an annual loss of 481.0 billion pesos (RM93.16 billion), an increase of 38% compared with 2019, despite returning to profit in the second half of the year.

Revenue slid 32% to 953.7 billion pesos.

Pemex joins oil firms worldwide that suffered massive losses as the Covid-19 pandemic grounded passenger jets, sparked an economic slump and caused oil prices to briefly turn negative for the first time.

For the fourth quarter of 2020, the group posted a profit of 124.2 billion pesos, helped by favourable currency movements, tax breaks and gains on financial instruments, it said.

That compared with a loss of 171.5 billion pesos in the same period of the previous year.

Pemex, which returned to the black in the three months to September, said it was the first time in more than four years that it had posted two consecutive quarterly profits.

Leftist President Andres Manuel Lopez Obrador has sought to help the firm regain its footing with a series of cash injections and other measures following years of declining production.

The company said that in 2020 it had achieved a “small but very significant increase” in oil production, which stood at around 1.7 million barrels per day on average.

Pemex said its debt rose to US$113.2 billion, an increase of 13.9% from the end of 2019.

Rating agencies Fitch and Moody’s have downgraded the company’s credit rating to junk status due to its vulnerability in the face of low oil prices and its need for greater government support.

Mexico, a country of 126 million people, has registered almost 184,000 known coronavirus deaths – the world’s third-highest toll. – AFP, February 27, 2021