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Over the past several weeks, Petroleos Mexicanos has suspended contracts with at least eight local and international oil-service providers and suppliers to cut spending, said the people, who asked not to be named because they weren\u2019t authorized to speak publicly on the matter. The bulk of cancellations is for offshore maintenance work in shallow-water hubs such as Ciudad del Carmen in the state of Campeche, two of the people said.<\/p>\n
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A Pemex spokeswoman declined to comment, noting that the information didn\u2019t come from the company.<\/p>\n
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Faced with the fallout from Covid-19 and oil price volatility, Pemex has been forced to backtrack on its ambitious plans to increase capital expenditure and expand drilling in order to reverse 15 years of oil output declines. Mexican President Andres Manuel Lopez Obrador has made Pemex the centerpiece of his administration\u2019s efforts to become self-sufficient in energy generation.<\/p>\n
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Mexico is falling victim to the crude market collapse despite its famous sovereign oil hedging program, the world\u2019s largest. In March, Finance Minister Arturo Herrera said the country\u2019s oil income was 100% covered by hedges and that he was more concerned about the spread of the coronavirus than the price rout.<\/p>\n
<\/p>\n
Brent crude, the global benchmark, plunged close to $15 a barrel in April as pandemic-related lockdowns obliterated demand for fuel. Though prices have rebounded to about $40 as economies reopen and the OPEC+ alliance has renewed its commitment to production cuts, they\u2019re still down 37% for the year.<\/p>\n
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Pemex is not expected to restart the suspended work until at least January next year, one of the people said.<\/p>\n
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Unemployment is soaring in the global oil industry after crude prices crashed to record lows in April. In just two months, the industry has cut almost half the number of jobs lost during the last crude crash of 2014 to 2016.<\/p>\n
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Pemex is struggling under a debt load of more than $100 billion, and saw record losses of $23 billion in the first three months of the year. Its offshore activity has been hit hard by Covid-19. As many as 112 employees and 3 contract workers have died from the virus so far, it reported late Tuesday.<\/p>\n
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Pemex forecasts a budget deficit of 30 billion pesos ($1.4 billion) this year, it said in a filing to the U.S. Securities and Exchange Commission last month. The company has sought board approval to cut operational expenditure by about 5 billion pesos and production capital expenditure by 40.5 billion pesos this year, according to the filing.<\/p>\n
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Earlier this week, national newspaper Reforma reported that as many as 8,000 workers had lost their jobs due to budget cuts at Pemex that resulted in the cancellation of 45 contracts worth about $160 million with offshore service providers such as Marinsa de Mexico and Cotemar.<\/p>\n
<\/p>\n
\u201cAt the moment everything is normal,\u201d said Greta Alcantara, Director of Institutional Relations for Grupo Cemza, the parent company of Marinsa. There have been no layoffs, and Marinsa is \u201cworking hand-in-hand with Pemex,\u201d Alcantara said. Cotemar declined to comment.<\/p>\n
<\/p>\n
It\u2019s not the first time that Pemex\u2019s suppliers have felt the pinch. During the previous price crash, about 10,000 oil-industry service contractors in Mexico lost their jobs as Pemex was forced to slash billions of dollars in spending and freeze exploration and production contracts.<\/p>\n
<\/p>\n
\u00a9 2019 Bloomberg L.P<\/em><\/p>\n gCaptain<\/p>\n","protected":false},"excerpt":{"rendered":" Over the past several weeks, Petroleos Mexicanos has suspended contracts with at least eight local and international oil-service providers and suppliers to cut spending, said the people, who asked not to be named because they weren\u2019t authorized to speak publicly on the matter. The bulk of cancellations is for offshore maintenance work in shallow-water hubs …<\/p>\n","protected":false},"author":1,"featured_media":11422,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[56],"tags":[1093,3335,5082,5481,5178,3075,7513],"class_list":["post-11421","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-marine-world","tag-contracts","tag-job","tag-losses","tag-pemex","tag-supplier","tag-suspends","tag-triggering"],"_links":{"self":[{"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/posts\/11421","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/comments?post=11421"}],"version-history":[{"count":0,"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/posts\/11421\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/media\/11422"}],"wp:attachment":[{"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/media?parent=11421"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/categories?post=11421"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/tags?post=11421"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}