0 Members and 1 Guest are viewing this topic.
Mexico’s state oil company hasn’t paid hundreds of workers for monthsMax de HaldevangMexico’s populist president is trying to reshape the country into an economy with strong worker protections that is driven by oil growth. Yet hundreds of workers at state oil firm Pemex have gone unpaid for months, current and former employees told Quartz.Even in the midst of the coronavirus pandemic, Pemex has not paid many of the employees it hired on temporary contracts in 2019 and hasn’t provided them with the health insurance, vacation, or other benefits it normally does, the sources said. The contractors work in a division that builds and renovates refineries—and many are assigned to the controversial $8 billion Dos Bocas refinery project in Mexican president Andres Manuel Lopez Obrador’s home state of Tabasco. While most of the unpaid contractors are now working remotely, sources said some are still working at the construction site.Lopez Obrador, a resource nationalist who wants Pemex to drive the Mexican economy as it did in the 1960s and 1970s, has made Dos Bocas central to his bid (paywall) to revive the firm, which is Latin America’s second-biggest company by revenue. But Pemex is also the world’s most indebted oil company. It lost $35 billion last year and Fitch downgraded the firm’s credit rating even further into “junk†territory earlier this month.Read more at: https://qz.com/1830576/mexican-state-oil-firm-pemex-isnt-paying-hundreds-of-workers/
A viable plan to rescue Pemex exists, but the president has chosen another path. In 2012, the Harvard Business School published a case study titled “Pemex: In a Free Fall?†that analyzed the challenges facing Mexico’s state oil company in 2009, when J.J. Suárez Coppel took the helm as CEO. Many of the issues outlined in the study remain a problem today: production and reserves in decline; high taxes resulting in after-tax losses; high levels of debt; not enough money for capital expenditure in exploration and production; too much concentration on large shallow-water fields; too many employees and a union that makes it hard to restructure; compressed wage scales; and legal limits that only allowed the company to sign service contracts with outside partners, leaving it unable to share risk.Ten years later, the situation is similar, but worse in almost every respect. Current crude production is at 1.67 million barrels per day, almost 40% lower than a decade ago. Proven oil reserves are currently 7.7 billion barrels versus 11.9 billion in 2009, a 35% decline. And Pemex is the most indebted oil company in the world, with $106 billion in financial debt, and pensions and other liabilities worth another $70 billion. Despite some advances, including a 15% reduction in a still-bloated payroll, the company is facing a more dire outlook than it was 10 years ago.For a long time Pemex lived off its considerable geological luck. In the 1970s, just when the price of oil boomed, the company discovered massive offshore fields in shallow waters. As a result, crude production multiplied by more than six. Cantarell, the most productive of those fields, peaked at 2.1 million barrels per day in 2004, a level higher than most OPEC producers. High rents and low lifting costs meant that for three decades the Mexican government could significantly over-tax Pemex, collect low taxes from the rest of the economy, subsidize refining, use the company as a social development tool, and still maintain (or even increase) production, with little investment. When production started to collapse in 2004, the oil price boomed, so the company still did not feel the pain immediately, delaying the reform push. Combine memories of the past and a tradition of resource nationalism that has been an integral part of the country’s ideology since the Mexican Revolution, and López Obrador believes, along with a significant part of the Mexican public, that the good times can come rolling back.More at link.
Emilio Lozoya, former CEO of state oil company Pemex who went on the run last May after being accused of serious financial irregularities during his tenure, was arrested in an upscale suburb of the Southern Spanish port city of Malaga on Wednesday. Lozoya is accused of taking part in an elaborate scheme designed to systematically “plunder†Mexico’s finances, according to the country’s Attorney General Alejandro Gertz Manero.Lozoya is under investigation for his alleged involvement in Pemex’s repurchase, for the obscenely inflated sum of $665 million, of two fertilizer plants that the oil company had sold to private investors many years earlier. One of the plants hadn’t been operational for 14 years — and still isn’t — while the other one operated well below capacity. Before the purchase of the fertilizer plants, international auditors warned Pemex’s board of their dire state, but the company went ahead with the purchase anyway.Such reckless lavishness was a constant feature of Lozoya’s tenure as CEO of Pemex. “It was conduct that was repeated in a very structured way with the aim of looting the country. I don’t see any other way to describe it,†says Gertz Manero.More at link.
