Prio to supply marine fuel with 15pc biodiesel content

Pemex budget cuts freeze vendor orders

Pemex budget cuts freeze vendor orders

Mexico City, 25 October (Argus) — Mexico's state-owned company Pemex stopped requesting or receiving new work orders from vendors in the past three to four weeks, likely linked to the company's plan to cut its budget by about $1bn in the last quarter, three industry sources and a Pemex source. "Upper management has issued clear instructions: No new projects until 2025," one Pemex source told Argus . Vendors report that these reductions are affecting all Pemex regions, with significant impacts on major well maintenance — such as pipeline renewals, valve replacements and secondary recovery techniques — essential for safe and efficient oil production. Without these services, oil service companies may need to shut down wells, risking oil spills or even explosions. The halt in work orders took effect in late September and has primarily hit orders related to maintenance in Pemex's exploration and production (E&P) operations. According to vendors, Pemex issued an internal directive on 11 October, instructing units to implement budget reductions across all E&P activities to save an estimated $1bn. Despite these cuts, vendors claim Pemex's new administration has not formally notified them about the halt — a pattern they say has become typical over the last six years. Adding to vendors' worries is Pemex's ongoing payment backlog. As of 2 October, Pemex's upstream division (PEP) owed Ps99bn ($5bn) to suppliers, with Ps81bn related to 2024 projects, Ps10.5bn from 2023 and Ps1.9bn from 2022, according to an internal document. Pemex's overall overdue payments peaked at Ps126.4bn in July. "The current situation is extremely worrisome," one Pemex supplier told Argus . "And there is no indication thatthere will be any new payments to vendors this month." Some top vendors, including Protexa, Marinsa, Naviera Integral and Solar Turbines, are weighing partial or complete work stoppages by early November unless payment issues are resolved. Drilling company Opex recently announced a "temporary adjustment" in its services because of payment delays, two other vendors said. A year ago, Pemex vendors discussed a general halt over similar payment delays, with some major suppliers like SBL, Halliburton, Weatherford and Baker Hughes eventually securing payments and continuing work. Now, with budget cuts looming into 2025, vendors are increasingly concerned that continued cuts and payment delays will severely impact Pemex's oil production, which hit a 40-year low of 1.45mn b/d in September. By Édgar Sígler Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.