Recipe for Pemex: Cost cuts and new partnerships, CEO says
Jose Antonio Gonzales Anaya, newly elected CEO of Pemex, and a former minister of finance, has been given what has been described a monumental task to cut the huge debt the Mexican national oil company has accumulated, and lead Pemex to a growth path, in these difficult times of low oil prices.
Only two weeks in his current position, Gonzalez was during the IHS CERAWeek energy conference in Houston, asked what his first priorities and steps would be since taking over the country’s oil giant.
He said his first task was to assume the new reality for Pemex of the new level of the price of oil.
He added the Pemex budget had been planned with $50 a barrel price, and not for the current price of Mexican mix which is closer to $25.
The first thing to do is to cut expenditures, Gonzalez said: “That’s what I’ve been concentrated on in the past two weeks.”
Firstly, he said he would aim to get efficiencies in costs and cut corporate expenditures. Furthermore, he said Pemex needs to prioritize its investments and its expenditures in the most profitable wells and areas.
„Two years ago we would have had to make these cuts, and there was not much we could do. Today we can prioritize our investments and find new partners to do these investments with.”
Gonzalez was referring to the fact that the Mexican oil and gas sector has undergone a big reform, enabling foreign oil companies to take part in the country’s oil and gas projects, either on their own, or in partnership with Pemex.
For example he said, Pemex has investments in deepwater that “we were going to go at alone, and now we don’t have to.”
He said Pemex was not only looking for financial resources, but for partners that will bring in efficiencies and new technologies to exploit oil in ways better that previously done in Mexico.
Challenge, but opportunity as well
Regarding the low oil prices environment, he said: “It’s certainly a challenging time, and I would have loved to have come at an easier time, but this challenge comes with the opportunity of energy reform that legally allows to find partners and to embark on this issue.“
He said the market would go back up eventually, and that Pemex needs to find the right partners in the meantime.
On incentives necessary to actually bring in the partners into Mexico, Gonzalez said those would be long term security, transparency, stability, predictability, with no surprises.
He also said Pemex was open for suggestions when it comes to those arrangements, the same Mexico has listened when it comes to the energy reform.
For a fair price…
Earlier this week, while giving the opening speech at the IHS CERAWeek, Enrique Pena Nieto, the president of Mexico, said the country would allow all companies to import refined fuels into Mexico.
On that note, Gonzalez was asked if Pemex would allow the foreign firms to use its infrastructure such as pipelines and infrastructure: The CEO laughed and said: “For a fair price, yes!“
If we have the infrastructure, and spare capacity, we will definitely be doing that for a right price, he said.
Speaking about Pemex’s debt obligations, he said this was a challenging, but a short-term concern that definitely needs to be addressed, but added that in the long-term there is every reason to believe there is a bright future ahead for Pemex.
Offshore Energy Today Staff