Fitch Ratings has downgraded Petroleos Mexicanos—or Pemex—squarely into junk territory after several accidents and “weak operating performance”. Fitch also lowered its ESG score after those accidents, which included an explosion at a natural gas platform that ended with fatalities and damages to critical infrastructure and assets, to reflect “the environmental and social impact” of those events.
Fitch slammed the company’s safety record, which it said would prevent Pemex from securing financing from banks and investors. Pemex is still more than $100 billion in debt.
Fitch rates Pemex as B+ (from BB-) for its Long Term Issuer Default Rating, and ccc- for Standalone Credit Profile.
Fitch has also placed the ratings on Rating Watch Negative (RWN). “The RWN reflects concern about the Mexican government’s ability and willingness to materially improve the company’s liquidity position and capital structure in the next two years without concessions from creditors,” Fitch’s Friday commentary reads.
Pemex has seen a multitude of accidents, the most recent of which was a fire on an offshore platform that led to a shut-in of 700,000 bpd. But that is just the most recent accident. Back in February, Pemex saw three fires at its facilities in a single day. That followed a pipeline explosion in November, another pipeline explosion in September, and an explosion and fire at a Pemex oil platform in August, the latter claiming the lives of five workers. It has also seen project delays, including the delay of its Olmeca refinery which was supposed to start up last December but was pushed into July of this year, before being delayed yet again. Olmeca has exceeded its budget seven times, and downsized its processing capacity.
Mexico’s rather lofty ambition for Olmeca was to gain some level of fuel independence.
By Julianne Geiger for Oilprice.com
