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Pemex is the world’s most indebted oil company - The Economist   

It is rare for the CEO of a company to admit to being anxious. But when, on October 9th, Octavio Romero, head of Pemex, Mexico’s national oil company, appeared before lawmakers, he came close to doing so. Mr Romero confirmed the substance of a letter leaked in September, in which Pemex informed Mexico’s treasury that it was unable to pay over $500m owed to three suppliers, one of which has started a dispute-resolution process. “We are busy, rather than worried,” Mr Romero claimed, not entirely convincingly.

Pemex has been the world’s most indebted oil company for several years. Its debt is over $100bn, equivalent to 8% of Mexico’s GDP. While Pemex’s exploration and production arm is profitable, the company is facing losses elsewhere, particularly from its refining operations. In July Fitch, a credit-rating firm, downgraded Pemex. The company’s debt is a risk to the country, too. Moody’s, another ratings agency, mentioned it as a factor in its decision in 2022 to downgrade Mexico’s rating. The recent affair over the $500m means Pemex will need more financial support from the government. For how much longer can the oil giant rely on bail-outs to stay afloat?

Some of Pemex’s problems have a long history. In the 1970s after Cantarell, one of the world’s largest oil fields, was discovered in the Gulf of Mexico, Pemex was the motor of the Mexican economy. But governments viewed it as a cash cow “and milked it to death”, says Jorge Castañeda Morales, an analyst.

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