Prelude to a Bailout

But is Pemex too big to save for Mexico?

Mexico’s biggest company, state-owned oil giant Pemex, notched up 13 consecutive quarters of rising losses and now faces the toughest test of its 78-year existence: staying alive.

Pemex just published its annual results for 2015. Even with expectations already at the bottom of the barrel, so to speak, Pemex somehow managed to both shock and disappoint in equal measure with the sheer scale of its total annual loss: 522 billion pesos ($30 billion), almost double its loss in 2014.

Operating costs increased 19% to $81 billion, sales plunged by $25 billion, and daily oil production fell by 6.7%. The company also ended 2015 owing suppliers $8.2 billion.

Its total debt is expected to surpass $100 billion this year. Luckily, Pemex’s new director José Antonio González Anaya was on hand to calm investor nerves by reiterating that Pemex is not insolvent — it just has liquidity issues. The Financial Times begs to differ, arguing that if Pemex were privately owned, it would already be bankrupt

Continue reading the article at WOLF STREET


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