Oil Price
Mexico has allowed Pemex to defer its June monthly tax payments to July 31 as the government continues to support its state oil giant that has been reeling under $100 billion in debts for years.
Petroleos Mexicanos, as Pemex is officially known, has been granted a government deferral of the so-called DUC levy for May, due in June, according to a government decree published on Tuesday evening and cited by Bloomberg.
The government hasn’t announced the amount of the deferred tax due, but payments for February and March have averaged about $854 million (15.5 billion pesos), per central bank data quoted by Bloomberg.
The deferral of the tax payment comes after the government abolished this levy for Pemex between October 2023 and January 2024, as outgoing President Andres Manuel Lopez Obrador has been seeking to back the heavily indebted state oil giant throughout his term in office.
President-elect Claudia Sheinbaum has vowed to continue the policy of government support to the state oil firm.
Continued support for Pemex remains a key challenge for Mexico’s new administration, Fitch Ratings said after the election earlier this month.
“Pemex’s debt, equivalent to almost 6% of GDP, remains a material contingent liability for the sovereign,” the credit rating agency noted.
The federal government has provided support of close to US$70 billion – or 4% of 2023 GDP – over the past five years, effectively absorbing the company’s debt onto its own balance sheet.
“The incoming administration has advocated for maintaining Pemex’s large role in the country’s oil market, which will entail continued federal government transfers absent meaningful improvements to the company’s operating efficiency,” Fitch said.
Meanwhile, Pemex’s crude oil exports rose by 34% in May from April, after Mexico reversed a plan to curb exports, as fires at two Pemex refineries affected local demand. Refinery processing at the six Pemex refineries fell last month to the lowest level so far this year, per data reported by Reuters.
By Tsvetana Paraskova for Oilprice.com
Lead image (Credit: Reuters)
