Fallout from Mexican president's Pemex 'rescue' set to greet successor

investing.com:

By Ana Isabel Martinez

MEXICO CITY (Reuters) — Mexico's outgoing president has taken steps to promote a smooth hand-off for national oil company Pemex, three sources told Reuters, but the latest moves will likely postpone a day of reckoning for the world's most heavily-indebted oil company.

Last week, President Andres Manuel Lopez Obrador rolled out fresh support for Pemex, part of his longstanding goal to make Mexico self-sufficient in the production of motor fuels, unveiling a new tax break worth about $6.4 billion.

The boost follows a whopping $90 billion in government support doled out to Pemex since Lopez Obrador took office in late 2018, spanning tax cuts and capital injections, most of it to service a crushing debt load of some $106 billion.

The company's distressed finances may fall to former Mexico City Mayor Claudia Sheinbaum, Lopez Obrador's anointed successor and current front-runner in polls ahead of June's election.

Mexico's next president takes office in October.

A Sheinbaum presidency would look to cut Pemex's dependence on government funds, one source close to her team told Reuters, using tax cuts to free up company spending elsewhere.

Sheinbaum has also committed to pursing Lopez Obrador's oft-repeated but vague goal of «energy sovereignty.»

A source close to Pemex, meanwhile, said the latest round of support will be used to cover $17.2 billion in debts to service providers, such as Halliburton (NYSE:HAL) and Baker Hughes.

«All this is part of a strategy of orderly transition aimed at a soft landing for the next administration,» said a high-ranking Pemex source, who spoke on condition of anonymity.

Priorities that already enjoy Lopez Obrador's «seal of approval,» however, could constrain his successor,