Pemex in Talks With Up to 10 Banks to Find Refinery Partnersby and
CEO hopes to have refinery JV structure in place by year end
Goldman, BofA, Credit Agricole among the 10: Gonzalez Anaya
Petroleos Mexicanos said it is in talks with as many as 10 investment banks including Goldman Sachs Group Inc., Bank of America Corp. and Credit Agricole SA to help the ailing oil producer find partners to improve its inefficient refining process.
Pemex, whose refineries lose more than $5 billion a year, has requested proposals from several investment banks, Jose Antonio Gonzalez Anaya, chief executive officer, said in an interview on the sidelines of an event at the Council on Foreign Relations in New York. The state-owned company, which hasn’t yet started to hear the proposals, expects to choose a bank and begin the search for refining partners by the end of the year or early 2017, he said.
"We have asked banks to give us a proposal" to structure the potential refining partnerships, Gonzalez Anaya said. "People come and give us their ideas and we’ll try to pick the best ones."
Gonzalez Anaya declined to say which of the company’s refineries could be considered for partnerships. "We are open" and considering "all the options," he said when asked about specific assets. Improving efficiency in Mexico’s refining sector "is a very important priority" for the company, he added.
Pemex, which is mired in its worst financial crisis in company history, has reiterated in recent months that it’s willing to sell non-strategic assets while seeking partnerships in oil production operations and refineries to generate cash flow and alleviate some of its $93 billion in debt, excluding pension liabilities.
"We are going to partner with someone who is very good at operating" the refineries, he said. "We are in the process of defining whether we are going to keep a majority."
Pemex has almost completed its debt issuance program for the year and is likely to raise funding in pesos in the near term, he said. The company, which is Mexico’s largest corporate debt issuer, is unlikely to go to market in the near future unless the "market conditions are right," Gonzalez Anaya said.
Gonzalez Anaya said in an interview earlier this month with Reuters that the company was considering the launch of its own oil hedging program, independent of the Mexican government’s current program. Mexico’s hedges, which serves as a shield against price declines through a series of financial deals with banks, paid out $6.4 billion last year amid the collapse in international oil prices.
Gonzalez Anaya said Thursday the company is evaluating several financial tools to protect itself against adverse market conditions and that it will decide whether to propose a new hedging program by the end of the year.
Credit Agricole did not immediately respond to requests seeking comment on the status of the reported talks with Pemex. Tiffany Galvin, a Goldman Sachs spokeswoman, and John Yiannacopoulos, a Bank of America spokesman, declined to comment.