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 Business News | April 2005 
Ramírez: Pemex's Future Unstable
 Wire services
| | The director of Petroleos Mexicanos describes the state oil monopoly as on the verge of bankruptcy. |
The nation's state-run oil monopoly is "on the verge of bankruptcy" with total liabilities of US88.5 billion and an annual investment requirement of US10 billion, the firm's top executive said Thursday.
"Those factors have us on the verge of bankruptcy, literally, and we need to say so," the director of Petroleos Mexicanos, Luis Ramírez Corzo, told Latin America's largest television network, Televisa.
"The financial structure of Pemex is in crisis," he said, noting that the company has US45 billion in debt.
More than half of that, US24 billion, is in off-balance-sheet obligations that must be paid to private contractors upon completion of projects. Pemex is forced to resort to such devices by a tax regime that claims more than 60 percent of the firm's gross revenue for the Mexican treasury.
"In a year or a year-and-ahalf, Cantarell the fourth largest (oil) field in the world will begin to decline and we don't have another one like it," Ramírez Corzo said, referring to the offshore deposit that produces nearly 80 percent of Mexico's total annual oil output.
The executive said Pemex needs roughly US10 billion worth of investment just to keep producing at current levels of 3 million to 3.5 million barrels per day.
But he placed the onus for solving the problem on Congress, saying that Pemex had already presented lawmakers with proposed tax changes to put the firm on a sounder financial and operational footing. The legislature, he said, needs to "assume its responsibility."
Pemex generated a record US70 billion in sales last year and made a "contribution of US54 billion to the federal government by way of taxes, fees and royalties," Ramírez Corzo said.
Thus, he continued, the company sent the equivalent of 77 percent of its gross revenues and 103 percent of net profits to the government's coffers.
The lower house of Congress last year passed a bill easing the fiscal burden on Pemex, but the proposal is still under discussion in the Senate.
Ramírez Corzo said that unless Pemex can significantly lower its tax bill or gain ready access to private capital, much of Mexico's oil will remain under the ground or beneath Gulf waters.
He stressed that allowing participation of private firms in Mexico's energy sector is not tantamount to privatization or a loss of sovereignty.
Pemex, the result of the 1940 nationalization of the Mexican oil industry, is seen as the "crown jewel" of state-owned enterprises and any notion of privatizing it is strictly offlimits. |
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