Pemex Future Lies in Partnerships After Changes, Minister Says

  • Cost cuts to improve Pemex's efficiency for the long term
  • Mexico seeking better auto export access to Brazil, Argentina

The future of Mexico state-owned oil giant Petroleos Mexicanos depends on establishing partnerships with private companies and improving efficiency, Economy Minister Ildefonso Guajardo said.

Pemex faces short-term challenges as it moves to working with private firms, and suppliers in states including Campeche and Tabasco are being hurt by late payments, Guajardo, who sits on the company’s board, said in an interview Friday. Pemex needs to cut spending, Guajardo said, although he declined to speculate on the size of the reduction.

President Enrique Pena Nieto replaced Pemex’s chief executive officer this week, tasking new CEO Jose Antonio Gonzalez Anaya with the job of cutting costs and improving productivity after 12 straight quarterly losses. Moody’s Investors Service placed Pemex under review for a possible downgrade last month, citing the risk for oil prices to decline further.

"It’s completely undeniable that the company has to go into a process of adjusting costs," said Guajardo from his 27th floor office with panoramic views of Mexico City’s Paseo de la Reforma boulevard. "Strategic partnerships with private investment -- that is the way out."

Pemex has been struggling after the price for Mexico’s oil exports fell 72 percent in the past 18 months amid a slump in global crude prices. While Pemex is focused on increasing output with partnerships, the company last year failed to put them in place and now hopes to begin the joint ventures in 2016, Chief Financial Officer Rodolfo Campos said in a December interview.

‘Bright Star’

Pemex’s preferential access to shallow-water oil fields with low production costs will allow the company to rebound in the medium and long term, Guajardo said.

Regarding the Mexican economy beyond oil, Guajardo said the auto sector is a "bright star," and that he expects Mexico to reach agreements with Brazil and Argentina by early next year to loosen barriers for auto exports to both countries.

Mexico may give Brazilian agricultural exporters better access to the Mexican market in exchange for improved conditions for car shipments to Latin America’s biggest market, and the election of President Mauricio Macri has created an opening with Argentina, Guajardo said.

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