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LatAmOil COMMENTARY LatAmOil
But the trade union has not been the only critic.But his written pledge did not reassure all observers, and potential investors have remained concerned about the possibility that the president will institute subsidies or price controls.
ey have also voiced reservations about the staying power of Bolsonaro’s reform agenda. Even if the current president is genuinely stead- fast on this front, some industry observers have commented, both outside investors and Brazil- ian consumers have no assurances that future governments will not reverse course. Decentralisation
Even so, it is worth highlighting the fact that the government’s reform plan will help decen- tralise a key portion of the oil and gas industry – namely, the downstream sector. It will treat Brazil’s oil-processing industry not as a single monolith but as a collection of regional markets, all of which must remain open to competition.
More specifically, Petrobras has accepted CADE’s insistence on preventing potential investors from gaining too much control in any area of the country. at is, it has agreed to follow the agency’s recommendations on not allowing single entities to buy more than one re nery in any region.
To this end, it has identi ed speci c pairs of assets that cannot be sold together because of their geographic proximity. For example, it has said it will not award Re naria Landulpho Alves (RLAM), a 376,650 barrel per day (bpd) plant in Bahia State, to the same company that buys Re naria do Nordeste (RNEST), a 115,000 bpd plant located in Pernambuco State.
If the reform plan succeeds, it should serve to diminish Petrobras’ in uence over the sector in the long run, beyond the end of Bolsonaro’s term. In the short term, though, the president and his allies will have to continue fending o challenges from critics.
MEXICO
Pemex to refinance debts, renew credit lines under $8bn loan deal
MEXICO’S national oil company (NOC) Pemex is set to restructure $8bn of its debts through a new syndicated loan deal.
Pemex began negotiations with a group of foreign and domestic banks earlier this year, with the aim of shoring up its nancial position. On June 28, Mexican President Andres Manuel Lopez Obrador revealed that the talks had been concluded successfully, with more than 20 banks joining the syndicate. Speaking at a press confer- ence, he stated that the new agreement would serve to renew some of Pemex’s credit lines and to re nance some of its liabilities.
e deal also extends the term of repayment from three years to five and reduces interest rates, he noted. He did not give an exact gure for the new rate.
e president went on to say that the loan deal was a positive development, calling it a sign of investors’ trust in Pemex. “ ese actions demonstrate that there is con dence,” he told reporters in Mexico City. “ e banks don’t act without information. ey don’t take a decision like this because they like the government. ey know that Pemex is in very good health.”
Lopez Obrador also said that the funding would help his government continue with its e ort to ght corruption and mismanagement at Pemex, calling the NOC a key driver of the Mexican economy. “Pemex is a fundamental company for the development of our country,” he said. “It [has been] battered because it was not
managed properly.”
A representative of the banking syndicate
echoed the president’s words, saying that all 23 lenders would work with the Mexican gov- ernment to improve Pemex’s finances. “This [move] shows our confidence in the current Pemex operation,” said Nuno Matos, the head of HSBC’s Mexican subsidiary. He also noted that the syndicated loan was the largest of its kind ever to be awarded to a Mexican borrower.
Pemex is deeply in debt, with total liabilities estimated at $106.5bn as of the end of 2018. It has said it intends to stabilise this gure over the next two years and then work on reducing the gure in 2021 and beyond. Nevertheless, the Fitch credit ratings agency recently down- graded the NOC’s securities to “junk” status, and Moody’s Investor Services may follow suit in the near future.
Week 26 03•July•2019 w w w . N E W S B A S E . c o m P5
