The Mexican government’s bid to produce more fossil fuels with the Deer Park refinery increases the risk that investors will refuse to invest in Pemex bonds.
The complete purchase of the Deer Park refinery by Petróleos Mexicanos (Pemex) from the private company Shell will be a long-term problem for fuel consumers in Mexico, Moody’s warned.
The credit rating agency estimates that global fuel demand will fall at least 20% by 2035, but Mexico and Pemex will not be able to lower domestic prices because they will have to pay for the refinery they bought in Houston, Texas, and the one they are building in Dos Bocas, Tabasco.
“It is a medium to a long-term problem. Someone is going to have to pay that bill and the pocket of someone who has to pay the bill for a product whose demand is going down, and therefore its prices, will suffer a lot, “the Moody’s analyst said in an interview with Forbes Mexico. Nymia Almeida.
Although the government foresees that the consumption of gasoline and diesel in Mexico will remain or even grow, Moody’s representative considered that it will be cheaper to import fuels that the United States and Europe no longer want to produce in Mexico.
Minutes after Shell announced the sale for 600 million dollars, President Andrés Manuel López Obrador (AMLO) commented that the refinery has the capacity to process 340,000 barrels, the same as the mega-works being built in Dos Bocas, Tabasco.
“We are going to stop buying fuel abroad, Pemex is going to process all the crude oil and turn it into gasoline, diesel. We are going to be self-sufficient by 2023 ”, commented the president on his Twitter account.
When asked if the purchase puts pressure on the company’s credit rating, Almeida replied that it is too early to know, as details are lacking on how they will pay for the infrastructure, but the acquisition is not an “absurd” move in terms of investment either the company owns $ 15 billion by 2021.
“It is a questionable decision. Is the investment within your budget? yes, but Pemex has to be careful, because it is going to have to take this amount from another investment that is a little more productive, such as in exploration and production, which is where it makes money, “he added.
The Moody’s analyst also mentioned that Mexico and Pemex are going in the opposite direction to the global energy transition. This energy policy translates as a risk since investors have the mandate to invest in companies that protect the environment and move to products without carbon emissions.
“In this context, there is a risk that if the environmental needs of the planet are not addressed on time by each company, if that is not taken into account, there could be a rejection with respect to the investment in Pemex bonds, that is a concern, “he concluded.
In April 2020, the credit rating agency downgraded Pemex’s note to junk bond (Ba2 from Baa3) and maintained its negative outlook.
Source: forbes.com.mx
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