{"id":18453,"date":"2016-03-03T11:36:05","date_gmt":"2016-03-03T16:36:05","guid":{"rendered":"http:\/\/olduvai.ca\/?p=18453"},"modified":"2016-03-03T11:36:18","modified_gmt":"2016-03-03T16:36:18","slug":"prelude-to-a-bailout","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=18453","title":{"rendered":"Prelude to a Bailout"},"content":{"rendered":"
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Prelude to a Bailout<\/a><\/h3>\n<\/header>\n
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But is Pemex too big to save for Mexico?<\/strong><\/div>\n

Mexico\u2019s biggest company, state-owned oil giant Pemex,\u00a0notched up 13 consecutive quarters of rising losses and now faces the toughest test of its 78-year existence: staying alive.<\/p>\n

Pemex\u00a0just published its annual results for 2015. Even with expectations already at the bottom of the barrel, so to speak, Pemex\u00a0somehow managed to both shock and disappoint in equal measure with the sheer scale of its total annual loss: 522 billion pesos ($30 billion), almost double its\u00a0loss in\u00a02014.<\/p>\n

Operating costs increased 19% to $81 billion, sales plunged by $25 billion, and daily oil production fell by 6.7%. The company also ended 2015 owing suppliers $8.2 billion.<\/p>\n

Its\u00a0total debt is expected to surpass $100 billion this year. Luckily, Pemex\u2019s new director Jos\u00e9 Antonio Gonz\u00e1lez Anaya was on hand to calm investor nerves by reiterating that Pemex is not insolvent \u2014 it just has liquidity issues. The Financial Times\u00a0begs to differ<\/a>, arguing that if Pemex were privately owned, it would already be bankrupt.<\/p>\n

The government\u2019s decision last week to slash the company\u2019s operating budget for 2016 by $5.6 billion is unlikely to help matters. According to Gonz\u00e1lez Anaya, most of the cuts will be felt in the firm\u2019s loss-leading refining operations (35%) as well as its exploration and production activities (46%), its biggest source of profits. Assets will be sold off left, right, and center. Investments will be curtailed. And strategic partnerships will be sought. In other words, as the company\u2019s debt grows, its output will continue to shrink.<\/p>\n

Pemex\u2019s autopsy has already begun. According to the FT, one of Pemex\u2019s biggest problems is the size of its workforce, which is seven times as large as Norway\u2019s state-owned Statoil and over\u00a0a third larger than the world\u2019s biggest oil majors, Shell, BP and Exxon Mobil. Certainly the firm\u2019s 153,085 employees, together with the huge pension liabilities they entail,\u00a0last estimated<\/a>\u00a0at over $90 billion, represent an unwieldy drain on resources.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Prelude to a Bailout But is Pemex too big to save for Mexico? Mexico\u2019s biggest company, state-owned oil giant Pemex,\u00a0notched up 13 consecutive quarters of rising losses and now faces the toughest test of its 78-year existence: staying alive. Pemex\u00a0just published its annual results for 2015. Even with expectations already at the bottom of the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[2015,195,5660,517,595,2174,4255],"class_list":["post-18453","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bailout","tag-debt","tag-don-quijones","tag-mexico","tag-oil-production","tag-pemex","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/18453","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=18453"}],"version-history":[{"count":2,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/18453\/revisions"}],"predecessor-version":[{"id":18455,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/18453\/revisions\/18455"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=18453"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=18453"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=18453"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}