(Bloomberg) -- Mexico’s finance ministry is preparing to enlist a consortium of banks to provide financing that Petroleos Mexicanos would use to pay off debt with service providers, according to a recording of remarks made by its CEO.
The state-owned oil company is coordinating with the finance ministry, which would potentially take on debt on its behalf to pay the service contractors, Chief Executive Officer Victor Rodriguez said at a private event on Friday hosted by Mexico’s College of Petroleum Engineers.
“We are being supported by the finance ministry,” Rodriguez said in a video recording obtained by Bloomberg. “We have a debt ceiling that we cannot use because it would be very expensive. So who is going to do it for us? The finance ministry.”
The content of the recording was confirmed by two sources familiar with the matter who are not authorized to comment as the meeting was private, while another source confirmed the financing plans.
Pemex didn’t immediately respond to a request to confirm the comments. A finance ministry spokesman also didn’t immediately respond to a request for comment.
Pemex and the ministry will work with a consortium of banks to provide the funds, Rodriguez said at the event. That will be in addition to the budgetary support already allocated to the state oil driller and refiner for 2025, he added. Pemex is aware that many providers will come looking for repayment, and so the company will be responsible about who it will pay first, Rodriguez said.
Pemex owes its suppliers more than $20 billion in back payments for oilfield work and other services, according to John Padilla, managing director of IPD Latin America, an energy consultancy.
Earlier this month, Mexico said it would transfer around $6.7 billion to Pemex via budgetary support to cover debt payments in 2025. The cash injection comes as President Claudia Sheinbaum looks to continue state support for the oil driller and refiner that is saddled by a nearly $100 billion debt burden. The company has around $9 billion in financial debt coming due next year and roughly $13 billion in 2026, when maturities will peak.
In the past, banks including Citigroup Inc. and Deutsche Bank AG have provided financing to Pemex to help it pay outstanding bills to oilfield service providers, including SLB. In return, SLB has effectively guaranteed against a Pemex default on the loan by issuing more than $1 billion of credit-default swaps to the two banks.
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