Economics: Pemex crude exports fall as company and public finances continue to deteriorate

MEXICO - Report 06 May 2024 by Mauricio Gonzalez and Francisco González

Official information regarding the evolution of Petróleos Mexicanos' financial and operating situation, as well as the performance of public finances as of the first quarter of 2024 was released in the last few days. Pemex registered a relative improvement between January and March in some of its production indicators. However, this translated into a deepening of its financial deterioration.

The volume of crude oil processed reached 1.25 mbd in the first quarter of 2024, but 32% of the oil processed at the company’s refineries located in Mexico were transformed into fuel oil, for which Pemex incurs enormous losses due to low demand and the costs involved in placing it in the market and/or storing it. Likewise, crude oil exports fell as production was redirected to the national refining system, which translates into steep losses for the company to the extent that the processing of crude oil in Mexican refineries is highly inefficient.

Financially speaking, total net income fell, and the company continues to generate a negative cash flow despite the intense level of support it receives from the federal government. In the same vein, there was a further deterioration of public finances in the first quarter of 2024 under the weight of increased spending on federal programs coupled with a drop in government oil revenues caused by tapering collections of taxes and duties from Pemex.

This government is leaving public finances more and more compromised for the next administration, given that on top of the existing structural vulnerability it is piling on new “unbudgeted” spending commitments for the coming years. These include the recently approved pension fund, as well as delays in the execution of emblematic investments that will require resources to finish and subsequently operate them, among others.

This week’s Economic Outlook analyzes recent indicators for Pemex and public finances as of the first quarter of 2024.

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