Mexico's finance ministry is taking significant steps to address the debt issue faced by Petroleos Mexicanos. According to a recording of remarks by its CEO, the ministry is preparing to enlist a consortium of banks to provide the necessary financing. This move comes as the state-owned oil company coordinates with the finance ministry to potentially take on debt on behalf of service contractors.

The Role of the Finance Ministry

CEO Victor Rodriguez stated in a private event that the finance ministry is providing support. They have a debt ceiling that cannot be used due to its high cost. The question then arises of who will step in to handle the debt for Pemex. Rodriguez emphasized that the finance ministry is the entity likely to do so. The content of the recording has been confirmed by two sources familiar with the matter, adding credibility to the plan. Pemex has not yet responded to confirm the comments, and the finance ministry spokesman also did not immediately respond to requests for comment.

The Consortium and Budgetary Support

Rodriguez mentioned that Pemex and the ministry will work with a consortium of banks to provide the funds. This is in addition to the budgetary support already allocated for 2025. Pemex is aware of the many providers seeking repayment and will be responsible for determining the order of payments. The company owes its suppliers more than $20 billion in back payments for various services. Earlier this month, Mexico announced a transfer of around $6.7 billion to Pemex via budgetary support to cover debt payments in 2025. This cash injection is part of President Claudia Sheinbaum's efforts to continue state support for the oil driller and refiner, which is burdened by a nearly $100 billion debt. Pemex has significant financial debt coming due in the next few years, with around $9 billion due next year and roughly $13 billion in 2026 when maturities will peak.

Past Financing Arrangements

In the past, banks like Citigroup Inc. and Deutsche Bank AG have provided financing to Pemex to help it pay outstanding bills to oilfield service providers such as SLB. In return, SLB has issued more than $1 billion of credit-default swaps to these banks to effectively guarantee against a Pemex default on the loan. This shows the complex web of financial arrangements and support mechanisms in place to assist Pemex in managing its debt.