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00:00The Doha talks as you know failed to yield an accord on production cuts. Whose side are you on. Saudi Arabia or Iran . I'm on Mexico's side. That's an easy answer . So we're going to do what. And play by the markets. The reason I ask the question is this. Mexico would like to see higher prices but the Iranians have the same attitude towards production as the Mexicans do produce as much as they can there is a difference. Our production capacity is stopped and it's not like we can produce much more oil than there is. So I think we can play and where we have been at these levels for quite a while. So I think we're going to play my market by what's best for Mexico. I have neither neither of those two . But of course Mexico would you would be it would be nice for Mexico and for Pemex to have higher oil price. What is best for Mexico. Well to have higher oil prices than what they are today . But I want to make a clarification point that's important . The Mexican economy is not dependent on oil. The oil is only between 7 I think or 10 percent of the economy. However the public finances are reliant on oil. So it's a it's a tricky it's a tricky proposition. But the Mexican government has been making progress in making the less independent from the oil revenues. So let me ask you this question. You've already had to make some tough decisions in response to low oil prices you've cut 100 billion pesos some five and a half billion dollars from Pemex this budget. What happens if oil prices aren't higher say a year from now or next February when you have to form a new budget. If 40 dollars or less is the new normal . What do you do. Well we made these these hundred billion pesos cut that you mentioned. We made it with a projection for the Mexican mix of 25. That means you know the WTI is about thirty five. So we think we need like every other oil company in the world to adjust to lower oil prices if the oil prices increase . That would be good news but we need to take you know to face the reality that the oil prices are not one. They're not 80 and they're not 70. So a budget of three hundred and seventy eight billion pesos which is what you're operating with right now is enough for the Mexican government. If WTI is at thirty five or Brent is at 40 Well it's enough for Pemex for this year for us to meet that target. Now we have to make some very deep concerns some very important cuts and I call these adjustments the short term challenge and we're facing a short term challenge that is very big. But then Nikkei is facing a very good long term opportunity which is the rules of the game in Mexico have changed and the energy reform is giving Pemex tremendous flexibility to face these issues and namely it means that we can partner with other people. But as you point out that's long term short term isn't just this year. Can you operate the company on a budget of less than freighter and 70 billion pesos . And if so how much less and where would you get those savings . Well that here the issue is twofold. We need to continue to get savings in cost efficiencies and there's a lot of room to do that. I think still. And secondly we can operated with his budget if we are successful. Well let me take that back. When we are successful ise getting partners and we will be successful . And this is an important change from Mexico for seventy five years only Pemex could invest in Phoenix exploration and for oil exploration and production refining and petrochemicals. Today that's not the case. What about the credit rating. You're one notch away from junk in one of the credit agencies there are there two others. We take these very seriously Pemex has a lot of bond holders. We met with investors today and yesterday and we are taking all the measures that we think we need. We think we're on the right track to ensure that Pemex retains these investor great. It's very important that we do that and that's why we make this 100 billion pesos cut is 20 percent of our budget. It's a lot given where your credit rating is right now . Could you sell net new debt if you had to. Yes we could. And in fact we are. The fact that there was a government support program announced five days ago it's going to lower our new debt requirements by 50 billion pesos but we're still going to have to get you debt. And we have been successful at it both domestically and abroad. Jose Antonio Pemex needs money. Which assets are you prepared to sell or perhaps leaseback where we're looking at just about you know all kinds of asset and let me say we're prepared to talk about and put on the table non-strategic assets Pemex was a vertically integrated monopoly for 75 years . So there are a lot of things that within the new rules are not they don't necessarily have to be run by pay. Well I can imagine that might be a fertilizer company that Pemex bought for example it could be some midstream type of assets refining is that opens to sale. That that's open to a to partnerships. Yes but not outright sale. Well we're going to want to retain part of the equity but we don't have to retain the majority. We're open to to having a partner in which he wants to charge already operator and majority operator in. So in refining. And where else in the entire structure from upstream to refining to downstream . Everything everything. Are you in talks currently with any potential buyers. Yeah some of them and I would like to call them partners rather than buyers. There the two and there's both of those. But I like to call them potential partners now are we. When we talk about potential partners are we talking about financial partners or are we talking about oil companies both the oil companies are from where they're from everywhere oil companies tend to be all over the world are global by nature . And it's interesting because they are very interested in Mexico but they're very interested in Phoenix oil companies don't like to go into a country without a domestic partner. And Pemex is a good domestic partner. You said Pemex has a lot of room left to cut on the operating side . Where. Well there's all there's there's a lot of efficiencies inefficiencies that we're still running in the company and we're going to go through them. We could improve our procurement practices we could improve our negotiating negotiating practices with which we find specialized equipment. There is there's room to maneuver I think. What about jobs. Well I hear I am very conscious about one thing jobs is not an end in itself job cutting is not an end in itself now but it is a sign of efficiency. For example profitability is the end of the game. Yes that's true. Exxon Exxon Mobil produces twice as much oil as Pemex with half as many employees and they have big refining operations to and midstream. Well let let me say this we will take the Labor decisions that we need to take based on profitability. And let me counter your example very quickly if the wage bill for Pemex is only 50 billion pesos so that would only take care of half of our cut for this year. So we have to do it. We are committed to becoming more efficient. But that's you know it's not the end game. Understood understood. But part of the reason I ask the question is the alternative . Besides finding other efficiencies is to cut capex. Sure that mortgage is your future. How can that be good for Pemex. How can it be good for Mexico. Well this I come back to the opportunity. We cut Pemex his own CapEx but we're looking for partners so we share the CapEx and we're going to share in the profits. But we're going to share the CapEx and that's the key issue and that's what makes me optimistic about the future for Pemex and Mexico. Jose Antonio. Here's a question I'd like to ask something I'd like to know what's your incentive to push for real change at Pemex . And the reason I ask is this. This company has had eight CEOs in the past two decades. Why would you want to do anything risky when there's a strong likelihood that you'll be doing something else three or four years from now. Just as every other Pemex CEO has. Well let me answer with what I did last time I was heading the Social Security Institute and it was insolvent. It's not insolvent anymore. That was three years . So I have the same incentives I am committed to being a good public servant and I want to get this done. It's a big challenge is the biggest challenge in my professional life. And if I do it I'll feel good about myself. It'll be good for Pemex and more importantly it'll be good for Mexico. Let's talk about it. Go ahead. Go ahead. No well. And you know this administration is committed to changing this administration the president said we didn't come here to just administer. We came here to change you're confident that Mr. Pinion yet though will protect you politically unpopular decisions that you are bound to make. Yes that's saying something. Here's a political question. Why not take Pemex public Aramco the world's biggest oil company is going to go public. Equal pay roll went public going public does some favorable things it raises money. It keeps you from having to sell assets while oil prices are low and it introduces accountability to finances and to operations. I think the biggest the biggest gain from going public would be the transparency that we would have. And Pemex is slowly moving towards more and more transparency. But let's remember where we come from. We were a state owned company since 1938. So there's a lot of history to overcome is that there's. Well yes but is it all is it also the point that ultimately that's what Pemex should be . Well it's hard to say. It's hard. What I in in the very distant future that may be. Well what do you think it may be but what do you think. Well I think and we tried to do this . We need to move towards the entire transparency issues that the public companies have to do and that will make us accountable and make us concentrate on profitable decision unprofitable decisions and profitable activity. So let's entertain a what if scenario. Let's forget about all of these things history politics pressure unions. If Pemex were a private company what would it look like. How many people would it employ. What businesses would it be in. That's that's that's a hard question to. But if you could if you had a blank slate if you could restructure this company any way you wanted. No one there's a lot of things we could do. I mean we can certainly be more efficient. There are a lot of activities that are not strategic anymore but it all depends on the reality. Pemex was asked to do everything from taking the oil out of the well to put in gasoline in gas stations to making fertilizers to making other petrochemical things. If you ask a different question and pose a different need then the question the company looks different . So the question you know the needs have changed. So the company will have to change if there's one thing of all the things that are not strategic that you could do to improve this company what's at the top of the list. There are some downstream activities that are not strategic. People can you know can create plans. So that's what we should expect to see you do first perhaps. I have to be careful with these things. You have to be careful with these with these announcements. But you know non-strategic downstream issues are probably things that we can move forward on .

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Pemex CEO: We're Seeking Partnerships With Private Firms

Jose Antonio Gonzalez Anaya, Pemex chief executive officer, sits down with Bloomberg's Erik Schatzker to discuss the company's strategy for dealing with low energy prices. (Source: Bloomberg)

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