AMLO Calls for More Cash Injections to State Driller Pemex

(Bloomberg) -- President Andres Manuel Lopez Obrador urged his successor to extend his policy of giving cash injections to Mexico’s state oil company. 

Continuing transfers to Petroleos Mexicanos is in the national interest, he told reporters in Mexico City, adding that these payments helped cut the company’s debt to under $100 billion. 

President-Elect Claudia Sheinbaum, a close ally of the incumbent, takes power in October.

The president, known as AMLO, did not elaborate on how Sheinbaum should support public companies, but he celebrated the state-led model he said helped boost crude production and electricity generation by state-run CFE.

“The president-elect agrees with what we have established, that these public companies are strategic,” said Lopez Obrador. “There are those who are waiting for a return to neoliberal policy, but they should accept that our economic policy will continue.”

AMLO has shored up Pemex’s finances with as much as 1.37 trillion pesos ($71 billion) in tax breaks and cash injections during his six years in office. Over that period, the company cut debt and stem the decline in its crude production, but output remains half of what it was at its peak two decades ago.

Sheinbaum has echoed AMLO’s policies of support for Mexico’s state-owned energy companies, but has also spoken of a need to refinance Pemex’s debt next year before large maturities come due.

Fixing Pemex is likely to be one of Sheinbaum’s biggest challenges. The company owes billions in late payments to service providers, while its infrastructure is crumbling after years of underinvestment, causing a slew of accidents, oil spills and methane leaks in recent years.

Sheinbaum and Pemex’s incoming chief executive Victor Rodriguez have said they will maintain Pemex’s oil production in coming years at around 1.8 million barrels per day, while focusing on meeting new energy demand with green energy projects.

(Updates with further details, background from the fifth paragraph)

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