Mexico’s Pemex Could Be Another Casualty of AMLO’s Energy Nationalism

Mexico’s Pemex Could Be Another Casualty of AMLO’s Energy Nationalism
Cars line up at a Pemex gas station in Merida, Mexico, Feb. 13, 2022 (photo by Artur Widak for NurPhoto via AP).

Russia’s invasion of Ukraine combined with the geopolitical instability it caused made 2022 a great year to be an oil major. Supply chain shortages and Western sanctions on Russian energy caused oil prices to surge, after which they leveled off at prices higher than their average over the past 10 years. As a result, Exxon made $56 billion in profit. Chevron made $36 billion. Shell made $40 billion, its highest profit in over a century. Commodity traders who move oil around the world also notched record-high profits. The numbers have sparked a wide debate over the fairness of these windfalls, how those companies are spending that money, and how it should be taxed.

And then there is Pemex in Mexico. While nearly every other oil major around the world stumbled into huge profits, Mexico’s state-owned oil company struggled financially and enters 2023 with questions about its long-term viability hanging over it.

Pemex owes about $10 billion in debt payments to creditors in 2023, almost half of that in the first quarter of the year. When it tried to raise $2 billion in bonds to refinance some of that debt last month, the company had to promise to pay over 10 percent interest to attract enough buyers. Those high rates come in spite of the fact that the company’s debt is supposedly fully backed by the Mexican government.

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