Ana Isabel Martinez and Anthony Esposito

MEXICO CITY, Reuters – Mexico’s state-owned oil company Petroleos Mexicanos is being pressured to repay its financial debts despite the promises of President Andres Manuel Lopez Obrador he would make payments until 2024. According to two people familiar with the matter, Pemex was due to repay a 2015 bond by Thursday. According to one source who requested anonymity: “Pemex will pay the maturities of its bonds this month using its own resources since April was not a good month for capital contributions (for that),” according to another.

Pemex and the finance ministry did not respond to our requests for comment.

Pemex has suffered from years of falling crude oil production. In 2020, the company lost its highly-coveted investment-grade credit rating.

Pemex owes $3.8 million in principal and interest payments between May-December, according to a source. According to the source, the Pemex had been notified three weeks back by the finance ministry that it needed to pay the eurobond. The reason was because of the rise in oil prices.

Pemex stated that it will shoulder $8.4 Billion in peso-denominated debt maturities by 2022 and $15.2 Billion in debt obligations in foreign currencies. Pemex was also asked by the ministry in recent weeks to begin amortizations mainly related to debt issuances. These amounts this year total $7.5 Billion, $7.4 Billion in 2023 and $8.8Billion in 2024.

The total amount of debt amortizations in 2021 was $6.4 Billion.

Reuters was told by a second source that Pemex would generate significant additional income, which allows for the company to be eligible to receive less government support. However, the source did not give details about how much income could result from the rise in Ukraine’s prices.

Pemex’s total financial debt ended 2021 at $109.0 million. The net loss was $10.9 million last year.

Pemex is currently working on a plan to refinance $3.5 billion of financial debt. The first source stated that the company anticipates the money will not be coming from the government.

Mexico swapped its short-term Pemex bonds in January for a 10-year bond. This was part of an effort to reduce debt and financial stress on Mexico.

In 2021, Mexico made capital contributions of 202.569 Billion Pesos to Pemex for its debt repayments. The government also granted tax incentives worth 73.280 Billion Pesos.

Recent statements by officials at Pemex indicated that capital will be provided to the company this year according to its maturity profile.

Lopez Obrador, who spoke out last month about Mexico’s plans to reduce the production of Pemex and modernize its refineries in response to rising oil prices, said that Mexico is reducing its refining capacity at Pemex.

Mexico stated that it will be using extra oil price revenue to support domestic gasoline and diesel prices. It is also helping to curb inflation.