Economics: Pemex continues to catch a break but may have squandered the chance to profitably apply the price-fueled windfall
In keeping with the general tenor of the company’s first quarter report, Pemex’s April-June performance continued to greatly benefit from the market conditions that have sent crude and gas prices sharply higher. The company’s second quarter results showed added momentum on numerous upstream and downstream fronts, along with greater revenues and margins that contributed to a 253.9 billion peso net profit for the first six months of 2022, its best bottom line for a first half since 2010.
There were also some negative tells, such as yet another fall in crude oil shipments abroad in keeping with President López Obrador’s "energy autarky" strategy. However, the contraction was much less pronounced than in previous quarters in a possible sign the company tried to take advantage of stronger export prices.
The favorable market context has provided the company and Mexico’s federal government a unique windfall that could be used to pay stressed suppliers and creditors, conduct long overdue maintenance on increasingly deteriorating assets and compensate an understaffed workforce that is buckling under the strain, or to better exploit highly promising deposits. But there is as yet no evidence suggesting such an investment focus is being considered, even as the first half windfall may be quickly receding given that hydrocarbon prices peaked in June and have been heading south ever since.
As for the electricity sector, the electric power utility CFE reported a price-fueled 13.1% increase in sales of electric power for the first half that was partially offset by higher production costs, while another substantial forex gain afforded a major drop in financing costs. Nevertheless, the company reported a 47 million peso net loss for 1H22.
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