Pemex issued the following announcement on July 16.
Before the president of Mexico, Andrés Manuel López Obrador, the general director of Petróleos Mexicanos, Octavio Romero Oropeza, presented the Pemex Business Plan 2019-2023, which was unanimously approved by the Board of Directors and lays the foundations for modernizing to the company, make it more competitive and guarantee its long-term financial viability and with it, consolidate Pemex as a lever for national development and guarantor of energy sovereignty.
In the morning conference held at the National Palace, the president of Mexico supported the plan and said that it is a rescue of the country's energy industry, after the resounding failure of what has been the Energy Reform. He reiterated the support of the Government of Mexico to Petróleos Mexicanos, through a gradual reduction of its fiscal burden, in such a way that it has resources to invest in new projects that increase oil production.
The head of Pemex emphasized that the plan establishes the measures to face the main structural problems facing the company: the high tax burden, its debt and the low investment, difficulties that caught the company in a vicious circle.
Romero Oropeza said that with the strategy and measures that will be adopted through the Business Plan, the company will achieve its budget balance in 2021 and it is expected to increase production to levels of 2 million 697 thousand barrels per day average in the last year of The present administration.
In the document, "Pemex makes clear its opening to business schemes with the private sector, under strict care of its interests and with fair and transparent agreements, leaving behind the practices in which Pemex always lost out," he said.
This Business Plan, said the head of Pemex, demonstrates that a different management model based on innovation, efficiency and, above all, without corruption is possible.
He assured that, with the support of the Government of Mexico, Pemex will have a relief in its tax burden, which will allow it to free resources to trigger investment projects in oil production. It should be noted that, as a first measure, for 2019, the fiscal benefit in the payment of oil production rights was extended, through the publication of a decree that resulted in a benefit of around 30 billion pesos for this year.
He explained that the objective is for the Government of Mexico to support Pemex for the first three years of the administration, in what will be a transition stage to recover oil production, so that, in the second half of the administration, Pemex will be the Support the Federal Government to finance the development and economic growth of our country.
He indicated that, in order to solve the problem of the high fiscal burden, the Federal Government plans to present a proposal to reform the Hydrocarbons Revenue Law to reduce the rate of the shared utility right, through a gradual scheme of 7% to 2020 and 4% by 2021. It is important to note that the current rate is 65% and a 54% rate would be reached by 2021.
He argued that by 2021, the Federal Government's capital contributions will be reduced to just 38 billion pesos.
When making a diagnosis of the company, the CEO of Pemex, recalled that in the last 14 years there was a considerable drop in oil production, as a result of the decrease in investment amounts. In the last five years alone, the reduction in production was almost 600 thousand barrels on average daily.
He said that as in the case of exploration and production activities, investment in refineries registered significant decreases in recent years, even affecting the availability of resources for maintenance, causing the process levels of the National System of Refining, bringing refined production to historical lows.
At the same time, he said, Pemex's debt increased considerably, only from 2013 to 2016, Pemex's debt doubled, going from just over a billion to more than two billion pesos, which led to, during the Last ten years, the company has recorded financial deficits.
Romero Oropeza clarified that Pemex is a company that generates value, since if profitability is measured in terms of EBITDA (income before interest, taxes, depreciation and amortization) and if compared against other international oil companies, it is observed that Pemex is above the industry average.
Likewise, he said, it is contemplated that public investment be complemented by private investment, through long-term service contracts for oil production (CSIEEs). The foregoing will allow Pemex to have resources to invest in oil production and the recovery of refinery capacity.
To increase the production of oil and gas, one of the fundamental axes of the Business Plan is to accelerate the development of the new discovered deposits, as well as to increase the development activity in fields in operation, both with new wells and with major repairs, confirmed the CEO of Pemex.
Likewise, he said, the plan foresees a gradual recovery of the refining capacity from the larger investment amounts that are destined for the rehabilitation of the six refineries and the development of the new Dos Bocas refinery.
Romero Oropeza explained that the goal is for Pemex to have resources to invest, which will allow it, from next year, to increase its production levels throughout the value chain, generating resources to improve its financial balance.
From the year the budget balance is reached, he said, Pemex will begin to generate surpluses that can be used to gradually pay off its debt and to finance high-impact programs and projects that trigger economic and social growth and development. from the country.
The head of the Productive Company of the State said that the results of the financial model show that in the 2021-2030 horizon, the Federal Government would increase the collection of oil tax resources. This projection demonstrates the positive effect that the support received would have in the transition period of the first half of this administration.
The Pemex Business Plan 2019-2023 was unanimously approved in the ordinary session 945 of the Board of Directors of Petróleos Mexicanos, which is composed of the Ministry of Finance and Public Credit, the Ministry of Energy, the Ministry of Economy, the Ministry of Environment and Natural Resources, the Federal Electricity Commission and independent directors. Also, in the framework of the same session, in terms of what the Mexican Petroleum Law states, the company's budget for the year 2020 was presented and approved, which will be sent to the Ministry of Finance to be considered in the Preparation of the Expenditure Budget Project of the Federation for the next fiscal year.
Original source can be found here.