Page 40 - Bloomberg Businessweek - November 19, 2018

Bloomberg Businessweek The Year Ahead 2019 Energy

company’s middle managers since the onset of assuming a portion of Pemex’s pension liabili-
energy reforms in 2014, according to four senior ties in 2016, the company added five years to the
employees and two who left earlier this year. seniority and age requirements to retire with
Directors and managers have been forced to full benefits.
stand in for those who left during the restruc- Still, some employees remain hopeful that the
turing, they say. Now those managers fear they’ll proposed changes will inject new life into the
have to shoulder even more work, including train- company. Since 2014, Pemex has suspended bil-
ing the newcomers. “A lot of guys are locking in lions of dollars of investment in refinery, natural
their retirement funds so they don’t lose them, so gas, and petrochemicals projects, says José Luis
this is going to come at a big expense,” says John Vazquez Vite, a supervisor in Pemex Industrial
Padilla, managing director of energy consultant Transformation, the company’s refining arm.
IPD Latin America LLC. “This will come at a huge “There’s not a whole lot to do these days,” says
cost for Pemex, both directly and indirectly.” Vite, who joined Pemex 36 years ago. Now maybe, ● López Obrador
The company’s crude production has fallen he says, “projects are going to restart again.”
for 13 straight years, and its refineries are operat- Fitch Ratings Inc. has downgraded Pemex’s
ing at just 37 percent of capacity. López Obrador outlook from stable to negative since the elec-
has promised to spend 100 billion pesos to build a tion, and Moody’s has issued a warning. Pemex
new refinery and upgrade existing ones and 75 bil- faces “uncertainty in the strategy and future of
lion pesos to help boost oil output by a third over the company, together with unattractive policies
two years. His aggressive plans, though, come for employees,” says Ignacio Quesada, managing
as Pemex’s ballooning debt, now about $106 bil- director at Alvarez & Marsal Holdings LLC and a
lion, has made it Latin America’s biggest corpo- former Pemex chief financial officer. “The future
rate borrower. of Pemex is a huge challenge because the market
Pension reforms and budget cuts are another has changed, and the company is not ready.” <BW>
frustration. In exchange for the government’s �Amy Stillman
PEDRO PARDO/AFP/GETTY IMAGES. DATA: INDIA’S MINISTRY OF COMMERCE, U.S. ENERGY INFORMATION ADMINISTRATION, BLOOMBERG, INTERNATIONAL ORGANIZATION FOR
MIGRATION, AMERICAN COMMUNITY SURVEY. *2018 CRUDE PRODUCTION IS THROUGH SEPTEMBER. **EMIGRANT DATA DOES NOT INCLUDE REFUGEES OR ASYLUM SEEKERS.
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Venezuela

▷ Oil output is plunging and hyperinflation has prompted millions to flee

●Venezuela’s Average crude production, Venezuelan immigrants by country, 2017**
petroleum production barrels per day* Increase since 2015 Up to 100% ◼ 100%-900% ◼ More than 900%
will fall to an average
970,000 barrels a day Projected
in 2019, according to 3m Mexico Canada
a Bloomberg survey
of analysts. Short of
cash, the country pays Dominican U.S.
its debts to China and Republic 351k
India with oil.
2 Spain 208k
Venezuelan crude imports,
barrels per day Costa Rica Panama Venezuela Portugal Italy
China India U.S.
700k 1 Trinidad
Ecuador & Tobago
Colombia
400 Peru 600k Brazil

100 0 Chile Argentina
119k 57k
7/2014 9/2018 1998 2019 Uruguay