Mexican state oil company Pemex loses $1.88 bn in Q1

Mexican state oil company Pemex registered a loss of 35.7 billion pesos ($1.88 billion) in the first quarter of 2019, it announced Tuesday, falling back into the red despite a government bailout.

The troubled company – the biggest in Latin America’s second-largest economy – said the loss was mainly due to financial costs caused by the depreciation of the peso against the dollar.

It is the latest bad news for both Pemex, whose $106.5-billion debt makes it one of the world’s most indebted companies, and for leftist President Andres Manuel Lopez Obrador, who is trying to help the firm regain its footing with a series of cash injections, tax benefits and other rescue measures.

Pemex said sales fell 10.4 percent in the period from January to March, to around $18.7 billion. It reported average production of 1.6 million barrels a day, down 12 percent from the same period last year.

The company’s production has plummeted for years, from a peak of 3.4 million barrels per day in 2004.

Experts say it needs massive investment to get back on track – but is severely limited by its already huge debt.

Ratings agency Fitch, which downgraded Pemex in January, says the firm needs an additional $9 billion to $14 billion annually – well beyond the $5.5-billion rescue plan launched by Lopez Obrador in January.

Earlier this month, Finance Minister Carlos Urzua announced the government would give the company an additional $5.2 billion from a public stabilization fund, but the move needs approval from Congress.

Lopez Obrador, who took office in December, is an energy nationalist who wants to restore Pemex to its glory days and cut Mexico’s dependence on foreign gasoline by building new refineries.

His committment to the company is a change in strategy from his predecessor, Enrique Pena Nieto, who signed a landmark energy reform in 2014 ending Pemex’s 76-year monopoly and reopening the oil sector to private companies.

Pemex lost a total of $7.5 billion in 2018, though it had posted a profit of $5.96 billion for the quarter from January to March last year.