Mexico’s state-backed oil company, Pemex, credit rating of which had recently been downgraded to a junk territory by all three big credit rating agencies such as Fitch, Moody’s and S&P amid over $100 billion in debts alongside years of Government mismanagement of the once-cherished oil tycoon, had been exploring an option to sharply downsize the number of private company drill rigs it had planned to use this year and the next, an internal Pemex memo seen by a press agency reporter had revealed late on Saturday.
Aside from that, the company memo had also detailed that the Mexican Government-backed oil tycoon would cancel contracts for 76 rigs, 14 of which were planned for the company’s most profitable field, the Ku Maloob Zaap (KMZ) accountable for nearly 50 per cent of Pemex’s entire crude oil production.
In point of fact, latest cost slashing program of Pemex that would directly affect revenues of 10 privately operated oil services companies, comes over the heels of a bucket of baleful narratives including a collapse in global crude oil prices, a looming recession amid the pandemic-led lockdown alongside an unprecedented scale of demand crunch, nonetheless, the program had actively contradicted the promises made by the Mexican President Manuel Lopez Obrador, who had reiterated numerous times that Mexico’s Pemex would keep increasing the production of crude oil.
Pemex plan to downsize drilling rig numbers justifies $1.8bn in cost cut announced late April
In concomitance, although it remained unclear on whether the proposal was being considered, but it had vindicated the procedure by which the Mexican oil giant had been planning to cut at least $1.8 billion worth of expenses announced later on April.
Aside from that, while the internal memo obtained from the Office of Operational Programming and Evaluation had provided further insights on how Pemex would be reducing its drilling rigs, according to the document the Mexican oil tycoon would reduce the number of offshore drilling rigs to 20 from current 42 and onshore equipment would fall to 29 from current 43 by end-2020.
The proposition to slash drilling equipment had also added that the onshore and offshore drilling rigs would be downsized to just fourteen and one respectively next year.