Re Article on Remero Here is an English version of the news article about Romero’s intentions. I am not sure of how good the translation is. I just use google translate. Either Google translate or Mr Monroy does not know the difference between a 100 million and 100 billion but here is the translation
Octavio Romero plans to reopen the farm outs after the alarming Pemex report in 2019
The discussion is intensified by the infrastructure plan and its presentation remains undefined. Nahle's resistance.
By Nadia Luna
02/28/2020
Pemex losses in 2019 by 346,135 million pesos begin to move the balance in Q4: Octavio Romero is increasingly willing to rethink partnerships with private companies, but still faces resistance from Roco Nahle, a discussion that has put a brake on the Presentation of the infrastructure plan for this sector.
These days, Abel Hilbert, deputy head of the Office of the President, has held meetings with private and state actors in the sector to promote the return of farmouts with Pemex, and even the rounds. From these dialogues a less reluctance by Romero Oropeza is already perceived with greater clarity, sources close to these meetings tell LPO.
Nahle's silence generates alarm within days of a key AMLO announcement
"The director already shows signs of being open to this strategy," they say, referring to the project promoted by actors such as Alfonso Romo and Arturo Herrera. "But there is still a great refusal of Nahle and Bartlett," the sources add. In that clash, the expected plan continues to be postponed.
It should be remembered that in November, when the National Infrastructure Plan was announced, the presentation of the energy part for January was outlined, and when it arrived that month it was reconsidered for this February. However, in the current discussions a date has not been put back on the table.
The truth is that the recent financial data of Pemex are imposed and that new "sensitivity" that is already perceived in the manager generates many expectations, because he is a man of great confidence for President Lpez Obrador, who for many is who leads the resistance of opening to private.
It is also important to remember that in the same Pemex Business Plan that Romero Oropeza carried out, the possibility of using the tools of energy reform was included.
How do you explain the biggest loss in four years?
The rescue of the Mexican oil company is one of the main flags of the Lpez Obrador government and the bet is based on the support of public finances, the reactivation of the refinery system and the exploration of shallow waters by Pemex, in addition to combat to the corruption that included the controversial fight against the huachicol. All that without opening more private contracts.
But the results are read almost overwhelmingly by the market as a sign that the strategy is not working, since last year the loss of Petrleos Mexicanos was the most serious since 2015 and 91.8% stronger than in 2018. In addition, last year sales fell 22% and EBITDA fell 89% to 102,089 million pesos.
Some analysts believe that it is the clear result of closing the door to associations and focusing on smaller fields. "It's not about producing more, but better. It's not quantity, it's profitability," they agree.
Arturo Carranza, an independent analyst, explains that one of the main factors of losses is the reduction of Pemex's sales abroad, which is due to lower production and cannot export such a high volume. It is also because in the domestic market they are losing participation in the fuel market.
Although he warns that there is a stabilization of the production platform and even a marginal increase, he nevertheless points out that "it is not enough" and in that sense he says that one should reflect on the opportunity to divest in some business lines, such as refining Well, he warns that it generates many losses to Petrleos Mexicanos.
He recalled the case of Petrobras, the Brazilian firm that reversed the red numbers. "It went through a divestment process, and what it was doing in the last three years was to divest assets and that has made it smaller, but it has focused on exploration and production."
For his part, Gonzalo Monroy focuses on labor liabilities, since he pointed out that he went from 100,000 million dollars in labor liabilities in 2015 to 55 million in 2018 and in 2019 he rebounded again at 34.8%.
For the expert, this is explained by the plan to monetize labor promissory notes, which was part of the rescue strategy to Pemex: "That meant that, if Pemex managed to have any benefit from the contractual renegotiation with the union, the Treasury would make a one-to-one match with labor liability savings.
He also believes that debt reduction was not enough: "In 2018 Pemex had a debt of 103 million dollars and made two billion dollars of profit and now reduced the debt, but they have a loss of 18,367 million dollars.”
With these results, the possibility that the rating agencies will take away the investment level becomes closer, confirming their warnings that the strategy was not a model would generate value.
"This is the time to grab and revalue. A fraction of the government wants to return to a growth model and this is the best way to see that there is something that is not working," Monroy said.