Suppliers threaten shutdown in July due to Pemex payment problems

The Mexican association of major oil service companies has warned it is experiencing an "unprecedented" crisis due to the non-payment by the state-owned Pemex. Pemex is the most indebted oil company in the world.

The association, in a letter to President Claudia Sheinbaum that was released on Monday afternoon warned that some of these companies could be forced to cease operations as soon as July. The letter didn't specify how much money was owned by the group members. These include Baker Hughes and Halliburton, Weatherford, SLB Oil & Gas, Grupo Mexico, as well as Weatherford.

Pemex is one of Mexico's biggest companies. It has a debt of $20 billion with a long list of suppliers and subcontractors, on top of another debt of $101 million. This is despite the government injecting billions of dollars in the past few years in order to pay the amortizations.

The Mexican Association of Oil Services Companies, AMESPAC, urged Pemex in a letter to process and release invoices for services rendered in the year 2024, guarantee regular billing and timely payment of those of 2025 and design a plan for payment to settle historical debts to companies in the sector.

AMESPAC stated in the letter that the service sector's activities have been significantly reduced due to the lack of payment from Pemex. It also added that its "cash flow is severely compromised and it cannot guarantee operational continuation as of July this year".

The letter concluded, "We expect an exact response that addresses and reverses our concerns regarding the decline in national hydrocarbon production which compromises Mexico’s energy security and its sovereignty."

AMESPAC is not the first to call on the government or Pemex regarding payments and the impact they have on hydrocarbon production by the state-owned firm.

Last Week

Hokchi Energy - one of Mexico's biggest private oil producers - has been reported to have sought out new ways of marketing its hydrocarbons due to delays in payment by Pemex.

Liabilities continue to grow despite numerous promises to pay and partial settlements. Meanwhile, oil production continues to decline. Pemex also reported losses and a 11% drop in production year-on-year during the first quarter. (Reporting and editing by Aida Pelaez-Fernandez, Marguerita Chy and Ana Isabel Martinez)

(source: Reuters)