Pemex to share up to 10% of production profits with private-sector partners

(Bloomberg) – Pemex (Petroleos Mexicanos) will split profits with private-sector partners in joint ventures that may account for as much as 10% of the state oil company’s output, said Mexico President Claudia Sheinbaum.

The division will be based on proceeds left over after the recovery of initial investments and the government’s 30% oil levy, she said during a media briefing Wednesday.

“That way, we guarantee that the private sector will recover its investment and collects its share of the profit, while Pemex collects its share,” Sheinbaum said. “If Pemex decides it needs help from the private sector, there’s a scheme established by law that guarantees profits for Mexicans, and that Pemex also profits.”

Although Pemex and the energy ministry are in the process of evaluating which projects could require private-sector participation, Sheinbaum said that such deals may involve as much as 10% of the driller’s production.

Last month, Sheinbaum’s administration presented a bill to congress that aims to streamline permitting and establish mechanisms for private sector participation in the energy sector. The legislation also would guarantee state-controlled energy companies Pemex and Comision Federal de Electricidad will retain their dominance on the domestic sector.

Pemex is working to lift itself out of slumping oil production and roughly $100 billion in debt that includes some $20 billion owed to oilfield-service providers.

Pemex Faces Its Largest Debt Maturities in the Next Three Years | Government has said financial support will continue in 2025

Pemex is working on a financing scheme to pay service providers, Sheinbaum said. Those the funds won’t come from the company’s 220 billion peso ($10.8 billion) budget for 2025, and the government is still in the process of reviewing claims to calculate total supplier debt, Sheinbaum said.

Previously, the president has said Pemex will repay contractors before the end of March.

The Mexican government doesn’t want Pemex to sell more debt in international markets, and will use Finance Ministry resources to aid the driller, Energy Minister Luz Elena Gonzalez said at the press briefing.

“In the case of the financial debt, I’ll clarify it’s coming down,” Gonzalez said. “We haven’t stopped paying any of our obligations, and it’s completely guaranteed.”

In the credit derivatives market, the cost of protecting the company’s debt against default for five years fell to 4.47 percentage points a year on Wednesday, according to ICE Data Services. That’s a drop of 21 basis points, on track for the biggest one-day decline since Nov. 7.